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HOW DO MINIMUM WAGE ADJUSTMENTS AFFECT WAGES IN CHINA: EVIDENCE BASED ON ADMINISTRATIVE PERSONAL INCOME TAX DATA

Langchuan Peng, Xiaxin Wang and Daixin He

Contemporary Economic Policy, 2019, vol. 37, issue 2, 349-365

Abstract: By using unique administrative personal income tax data covering the population of a middle‐sized Chinese city from 2009 to 2013, we explore how minimum wage adjustments affect wages of low‐wage workers. The empirical evidence documented in this paper suggests a unique pattern of minimum wage regulation: while it permits wages to stay below the prevailing minimum wage threshold temporarily, it does encourage a higher growth rate for wages below the threshold. Overall, such a pattern might help lessen any downward pressures on employment, while ensuring that low‐wage earners gradually get better off over time. (JEL J3, J6, P5)

Date: 2019
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https://doi.org/10.1111/coep.12413

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Contemporary Economic Policy is currently edited by Brad R. Humphreys

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