IDEAS home Printed from https://ideas.repec.org/a/taf/rcjaxx/v4y2016i3p339-355.html
   My bibliography  Save this article

The enforcement of the Minimum Wage Policy in China and firm cost stickiness

Author

Listed:
  • Wei Jiang
  • Wentao Yao
  • Yuming Hu

Abstract

In the light of drawbacks in prior studies exploring the adjustment costs driver of cost stickiness, this paper dynamically examines how the 2004 Minimum Wage Policy (MWP) affects cost stickiness in Chinese firms through its immediate effect on increased hiring costs. The results show that cost stickiness weakens after the enforcement of the 2004 MWP. Further evidence shows that, in SOEs and firms with low average wages, in labour-intensive industries, and in regions with low marketisation level, the effect of the 2004 MWP on firm cost stickiness strengthens. The paper not only overcomes the drawbacks in terms of reverse causality and alternative explanations in prior studies, but also provides insight on how raising China’s minimum wage could affect firm hiring costs, employment, and thus cost management, which helps improve China’s MWP.

Suggested Citation

  • Wei Jiang & Wentao Yao & Yuming Hu, 2016. "The enforcement of the Minimum Wage Policy in China and firm cost stickiness," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 4(3), pages 339-355, July.
    • Handle: RePEc:taf:rcjaxx:v:4:y:2016:i:3:p:339-355
    DOI: 10.1080/21697213.2016.1218631
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/21697213.2016.1218631
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/21697213.2016.1218631?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rcjaxx:v:4:y:2016:i:3:p:339-355. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rcja .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.