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Spillover Effects of Labor Protection: Minimum Wage and Digital Innovation

Author

Listed:
  • Yuanchao Bian
  • Kaiwen Wu
  • Junhong Bai

Abstract

Minimum wages standards for low‐income groups may encourage firms to adopt low‐skilled labor‐saving measures, generating spillover effects on digital innovation. This paper examines how minimum wages can influence firms' digital innovation through the substitution of high‐skilled labor for low‐skilled labor and the substitution of labor by intelligent capital. Following an increase in minimum wages, the number of patents related to enterprises' digital innovation increased. Minimum wage standards encouraged the upgrading of labor skills within enterprises, and accelerated the construction of automated and intelligent systems, leading to the substitution of low‐skilled labor by high‐skilled labor and intelligent capital. The effects of minimum wages on enterprises' digital innovation were mainly observed in labor‐intensive enterprises, non‐state‐owned enterprises, enterprises located in the eastern region, and those with relaxed financing constraints. This study provides insights into the factors influencing enterprises' digital innovation and can inform policies to encourage enterprises to achieve digital transformation.

Suggested Citation

  • Yuanchao Bian & Kaiwen Wu & Junhong Bai, 2026. "Spillover Effects of Labor Protection: Minimum Wage and Digital Innovation," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 34(2), pages 142-181, March.
    • Handle: RePEc:bla:chinae:v:34:y:2026:i:2:p:142-181
    DOI: 10.1111/cwe.70023
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    References listed on IDEAS

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