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Falling into Poverty or Escaping from It? The Effect of the Minimum Wage in Urban China

Author

Listed:
  • Démurger, Sylvie

    (CNRS)

  • Lin, Carl

    (Bucknell University)

  • Schmillen, Achim

    (World Bank)

  • Wang, Dewen

    (World Bank)

Abstract

Minimum wages are found to have an inconclusive impact on poverty. Using China’s individual-level panel dataset combined with county-level minimum wages, our paper shows that minimum wages have a moderate yet sustained effect on poverty reduction. The results show a two-sided effect: higher minimum wages help pull some workers out of poverty, while simultaneously pushing others in. This dynamic of larger “pulling” effects being counterbalanced by smaller “pushing” effects explains why existing studies often find that minimum wages have a negligible or minimal impact on poverty reduction. Notably, the poverty reduction effect is most pronounced for female workers.

Suggested Citation

  • Démurger, Sylvie & Lin, Carl & Schmillen, Achim & Wang, Dewen, 2025. "Falling into Poverty or Escaping from It? The Effect of the Minimum Wage in Urban China," IZA Discussion Papers 18326, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18326
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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