Minimum wage and labor self-funded training: evidence from China

Shuang Ma, Baoling Mo and Xiaoyu Meng

Journal of Economic Behavior & Organization, 2025, vol. 235, issue C

Abstract: We examine the impact of minimum wage increases on labor self-funded training by first constructing a theoretical model that explores the effects under both perfectly and imperfectly competitive market conditions. We then empirically analyze the impact using data on training enterprise registrations and household spending on training. Theoretically, we find an increase in the minimum wage is expected to suppress demand for low-skilled labor, leading affected workers to engage in self-funded training to compete for a limited number of job positions. Empirically, a minimum wage increase significantly boosts the number of newly registered training enterprises and household expenditures on skill training. Mechanism analysis reveals that a higher minimum wage increases labor costs for enterprises, leading them to raise skill requirements during recruitment, thereby encouraging job market participants to pursue self-funded skill training.

Keywords: Minimum wage; On-the-job training; Labor self-funded training; China (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:235:y:2025:i:c:s0167268125001696

DOI: 10.1016/j.jebo.2025.107050

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