Impact of Minimum Wage Standard on Occupational Income Inequality and Common Prosperity in China

Jing Yuan, Xiaomin Liu, Yinghui Wang and Zongwu Cai
Additional contact information
Jing Yuan: School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China
Xiaomin Liu: School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China
Yinghui Wang: School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China
Zongwu Cai: Department of Economics, The University of Kansas, Lawrence, KS 66045, USA

No 202404, WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS from University of Kansas, Department of Economics

Abstract: To achieve the common prosperity is an inevitable goal for the Chinese-style modernization. As an important policy tool for regulating income distribution in the labor market, it is greatly significant to see whether it can effectively lowering and cover the bottom. Using micro-data from the China Household Dynamics Tracking Survey, this paper measures the degree of inequality within occupations in China and explores the impact of the China's minimum wage standard on residents' occupational income inequality. Our empirical results show that for every 100 RMB yuan increase in the minimum wage standard, the Gini coefficient, which measures the level of income inequality among residents, drops by 0.318, which has an obvious economic effect. Income effect analysis results show that for every 100 RMB yuan increase in the minimum wage standard, income inequality for people in the high unequal income group falls remarkably by 0.362. The middle group has the weakest impact effect, and income inequality for people in the low unequal income group falls by only 0.126. This finding shows that the income effect brought about by the increase in the minimum wage standard is mainly reflected in the truncation effect on low-income people. By directly raising their income levels, the wage gap between low- and middle-income people has been reduced, and the level of income inequality has been reduced. Therefore, the improvement of the China's minimum wage standard in the future should be based on priority employment policies, starting with the goal of lowering the minimum wage standard and safeguarding the lives of low-income groups, and steadily promoting the common prosperity and making the substantial progress.

Keywords: Inter-occupational Income inequality; , Pareto distribution; Minimum wage standard; Common prosperity (search for similar items in EconPapers)
JEL-codes: C10 D30 D63 J30 (search for similar items in EconPapers)
Date: 2024-02, Revised 2024-02
New Economics Papers: this item is included in nep-cna and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www2.ku.edu/~kuwpaper/2024Papers/202404.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www2.ku.edu:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kan:wpaper:202404

Access Statistics for this paper

More papers in WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS from University of Kansas, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Professor Zongwu Cai ().