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

Sylvie Démurger (), Carl Lin (), Achim Schmillen () and Dewen Wang ()
Additional contact information
Sylvie Démurger: CNRS
Carl Lin: Bucknell University
Achim Schmillen: World Bank
Dewen Wang: World Bank

No 18326, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: poverty; minimum wages; China (search for similar items in EconPapers)
JEL-codes: I32 J3 J88 (search for similar items in EconPapers)
Date: 2025-12
New Economics Papers: this item is included in nep-inv and nep-lma
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