Effects of the Minimum Wage on Small Firms in China: Spillover Effects from Large Firms

Qiaoyi Chen (), Zhao Chen () and Lin Guan ()
Additional contact information
Qiaoyi Chen: China Center for Economic Studies Fudan University Shanghai, 200433, China
Zhao Chen: China Center for Economic Studies Fudan University Shanghai, 200433, China
Lin Guan: School of Economics and Management Hefei Normal University Anhui, 230601, China

Asian Economic Papers, 2022, vol. 21, issue 1, 47-63

Abstract: This study investigates how minimum wage affects small firms through spillover effects from large firms. Using firm-level panel data from Anhui Province in China, we find that after a minimum wage increase, small firms will reduce workers' wages and create jobs due to the inflow of displaced workers from large firms. This spillover effect is larger for micro firms and private firms, where minimum wage compliance tends to be lower. We also find that high-tech small firms are more affected than low-tech ones because of their greater demand for skilled labor. Our findings not only highlight the unintended consequences of minimum wage on small firms in China, but also help to explain the ambiguous employment effects of minimum wage on the covered sector in developing countries.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1162/asep_a_00844
Access to PDF is restricted to subscribers.

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:tpr:asiaec:v:21:y:2022:i:1:p:47-63

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=1535-3516

Access Statistics for this article

Asian Economic Papers is currently edited by Wing Thye Woo, Sungbae An, Fukunari Kimura and Ming Lu

More articles in Asian Economic Papers from MIT Press
Bibliographic data for series maintained by The MIT Press ().