Determining Minimum Wages in China: Do Economic Factors Dominate?

Christian Dreger, Reinhold Kosfeld () and Yanqun Zhang ()
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Yanqun Zhang: Chinese Academy of Social Sciences

No 9716, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Minimum wages may be an important instrument to reduce income inequality in a society and to promote socially inclusive economic growth. While higher minimum wages can support the Chinese transformation towards consumption driven growth, they can worsen the price competitiveness in export markets. As they differ throughout the country, this paper investigates their determinants at the regional level. In addition to a broad set of economic determinants, such as per capita income and consumption, consumer prices, unemployment and industrial structures, spatial effects are taken into account. They might arise for different reasons, including competition of local policymakers. The results show that the impact of economic variables declines, once spatial spillovers are considered. Although the minimum wage regulation pursues the relevance of economic factors in the determination of the appropriate levels, the actual development is largely driven by regional dependencies. As minimum wage standards set by local officials do not fully reflect the regional economic development, further reforms should be on the agenda.

Keywords: spatial effects; minimum wages; Chinese transformation; spatial Durbin model (search for similar items in EconPapers)
JEL-codes: C23 J30 R23 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2016-02
New Economics Papers: this item is included in nep-cna, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Review of Urban & Regional Development Studies, 2019, 31 (1-2), 44 - 59

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Related works:
Journal Article: DETERMINING MINIMUM WAGES IN CHINA: DO ECONOMIC FACTORS DOMINATE? (2019)
Working Paper: Determining Minimum Wages in China: Do Economic Factors Dominate? (2016)
Working Paper: Determining minimum wages in China: Do economic factors dominate? (2016)
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