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Impact of Minimum Wages on Employment

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  • Jinlan Ni
  • Guangxin Wang
  • Xianguo Yao

Abstract

This article examines the impact of the minimum wage on employment in China using data from 2000 to 2005. The effect of the minimum wage on employment levels was found to be mixed. Overall, minimum wages have no significantly adverse effect on employment. In particular, the results in the eastern region of China indicate few significant negative effects, which is consistent with the minimum wage theory in the competitive market. In contrast, the central and western regions experience few significantly positive effects, which is consistent with the theory in the monopsony model. The results are robust regardless of ownership (non-state-owned enterprises, collectives, private enterprises, and other types), industry type (manufacturing, wholesale and retail trade, hotel and restaurant), and gender of workers. Low real minimum wages, weak enforcement capabilities, and the buyer's labor marketâthe three factors that may account for the effects of minimum wages on employment in Chinaâare analyzed.

Suggested Citation

  • Jinlan Ni & Guangxin Wang & Xianguo Yao, 2011. "Impact of Minimum Wages on Employment," Chinese Economy, Taylor & Francis Journals, vol. 44(1), pages 18-38, January.
    • Handle: RePEc:mes:chinec:v:44:y:2011:i:1:p:18-38
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    Citations

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    Cited by:

    1. Sandra PONCET & Florian MAYNERIS & Tao ZHANG, 2014. "The cleansing effect of minimum wages - Minimum wages, firm dynamics and aggregate productivity in China," Working Papers P113, FERDI.
    2. Patrick Belser & Uma Rani, 2015. "Minimum wages and inequality," Chapters, in: Janine Berg (ed.), Labour Markets, Institutions and Inequality, chapter 5, pages 123-146, Edward Elgar Publishing.
    3. Mayneris, Florian & Poncet, Sandra & Zhang, Tao, 2018. "Improving or disappearing: Firm-level adjustments to minimum wages in China," Journal of Development Economics, Elsevier, vol. 135(C), pages 20-42.
    4. Pi, Jiancai & Zhang, Pengqing, 2016. "Hukou system reforms and skilled-unskilled wage inequality in China," China Economic Review, Elsevier, vol. 41(C), pages 90-103.
    5. Belman, Dale. & Wolfson, Paul J., 2016. "What does the minimum wage do in developing countries? : A review of studies and methodologies," ILO Working Papers 994893283402676, International Labour Organization.
    6. Susana HERRERO-OLARTE & Mateo LOAIZA, 2021. "Structural Or Conjunctural Changes To Reduce Poverty In Ecuador?," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 21(2), pages 19-36.
    7. Tony Fang & Carl Lin, 2015. "Minimum wages and employment in China," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-30, December.
    8. Tony Fang & Morley Gunderson & Carl Lin, 2021. "The impact of minimum wages on wages, wage spillovers, and employment in China: Evidence from longitudinal individual‐level data," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 854-877, May.
    9. Nidhiya Menon & Yana van der Meulen Rodgers, 2017. "The Impact of the Minimum Wage on Male and Female Employment and Earnings in India," Asian Development Review, MIT Press, vol. 34(1), pages 28-64, March.
    10. Drydakis, Nick, 2015. "The effect of unemployment on self-reported health and mental health in Greece from 2008 to 2013: A longitudinal study before and during the financial crisis," Social Science & Medicine, Elsevier, vol. 128(C), pages 43-51.
    11. Christian Dreger & Reinhold Kosfeld & Yanqun Zhang, 2019. "Determining Minimum Wages In China: Do Economic Factors Dominate?," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 31(1-2), pages 44-59, March.
    12. Katzkowicz, Sharon & Pedetti, Gabriela & Querejeta, Martina & Bergolo, Marcelo, 2021. "Low-skilled workers and the effects of minimum wage in a developing country: Evidence based on a density-discontinuity approach," World Development, Elsevier, vol. 139(C).
    13. Neumark, David & Munguía Corella, Luis Felipe, 2021. "Do minimum wages reduce employment in developing countries? A survey and exploration of conflicting evidence," World Development, Elsevier, vol. 137(C).
    14. Paul Oshagwu Opone & Kelvin Obi Kelikwuma, 2021. "Analysing the Politics of Nigeria’s 2019 National Minimum Wage: Towards a Public Policy," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(4), pages 1135-1149, December.
    15. Saari, Mohd Yusof & Hassan, Azman & Said, Rusmawati, 2013. "Who Gain and Lose from the Minimum Wage Policy?," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 47(2), pages 173-182.
    16. Zheng Li & Fengshuo Liu & Shuai Mi, 2022. "Can an increase in the minimum wage standard force enterprises to innovate? Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3807-3819, December.
    17. Sandra PONCET & Florian MAYNERIS & Tao ZHANG, 2014. "The cleansing effect of minimum wages - Minimum wages, firm dynamics and aggregate productivity in China," Working Papers P113, FERDI.

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