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Compliance with legal minimum wages and overtime pay regulations in China

Author

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  • Linxiang Ye
  • TH Gindling
  • Shi Li

Abstract

We use a matched firm-employee data set to examine the extent of compliance with minimum wage and overtime pay regulations in Chinese formal sector firms. We find evidence that there is broad compliance with legal minimum wages in China; fewer than 3.5% of full-time workers earn less than the legal monthly minimum wage. On the other hand, we find evidence that there is substantial non-compliance with overtime pay regulations; almost 29% of the employees who work overtime are not paid any additional wage for overtime hours, and 70% are paid less than the legally-required 1.5 times the regular wage. JEL codes: J3, J8, O17 Copyright Ye et al. 2015

Suggested Citation

  • Linxiang Ye & TH Gindling & Shi Li, 2015. "Compliance with legal minimum wages and overtime pay regulations in China," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-35, December.
    • Handle: RePEc:spr:izaldv:v:4:y:2015:i:1:p:1-35:10.1186/s40175-015-0038-2
    DOI: 10.1186/s40175-015-0038-2
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    References listed on IDEAS

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    2. Ernest Dautovic & Harald Hau & Yi Huang, 2017. "The Consumption Response to Minimum Wages: Evidence from Chinese Households," IHEID Working Papers 01-2017, Economics Section, The Graduate Institute of International Studies.
    3. Fan, Haichao & Lin, Faqin & Lin, Shu, 2020. "The hidden cost of trade liberalization: Input tariff shocks and worker health in China," Journal of International Economics, Elsevier, vol. 126(C).
    4. 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.
    5. Karolina GORAUS‐TAŃSKA & Piotr LEWANDOWSKI, 2019. "Minimum wage violation in central and eastern Europe," International Labour Review, International Labour Organization, vol. 158(2), pages 297-336, June.
    6. Ritchie, Felix & Veliziotis, Michail & Drew, Hilary & Whittard, Damian, 2017. "Measuring compliance with minimum wages," Journal of Economic and Social Measurement, IOS Press, issue 3-4, pages 249-270.
    7. Gan, Li & Hernandez, Manuel A. & Ma, Shuang, 2016. "The higher costs of doing business in China: Minimum wages and firms' export behavior," Journal of International Economics, Elsevier, vol. 100(C), pages 81-94.
    8. Fan, Haichao & Lin, Faqin & Tang, Lixin, 2018. "Minimum Wage and Outward FDI from China," Journal of Development Economics, Elsevier, vol. 135(C), pages 1-19.
    9. Tobias Haepp & Carl Lin, 2017. "How Does the Minimum Wage Affect Firm Investments in Fixed and Human Capital? Evidence from China," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1057-1080, November.
    10. Ren, Yanjun & Peng, Yanling & Campos, Bente Castro & Li, Houjian, 2021. "Higher minimum wage, better labour market returns for rural migrants? Evidence from China," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 34(1), pages 1814-1835.
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    More about this item

    Keywords

    China; Labor protection regulations; Minimum wages; Overtime pay; Compliance;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J8 - Labor and Demographic Economics - - Labor Standards
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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