The Consumption Response to Minimum Wages: Evidence from Chinese Households

Ernest Dautović, Harald Hau and Yi Huang ()
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Yi Huang: The Graduate Institute of International and Development Studies

No 01-2017, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: This paper evaluates the Chinese minimum wage policy for the period 2002-2009 in terms of its impact on low income household consumption. Using a representative household panel, we find support for the permanent income hypothesis, whereby unanticipated and persistent income increases due to minimum wage policy change are fully spent. The impact is driven by households with at least one child. We infer significant positive welfare effects for low income households based on expenditure increases concentrated in health care and education, whereas a negative employment effect of higher minimum wage cannot be confirmed.

Keywords: Minimum wages; Labor income; Household consumption; Permanent income hypothesis (search for similar items in EconPapers)
JEL-codes: C26 E24 J38 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2017-01
New Economics Papers: this item is included in nep-mac and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Consumption response to minimum wages: evidence from Chinese households (2019)
Working Paper: The Consumption Response to Minimum Wages: Evidence from Chinese Households (2017)
Working Paper: The Consumption Response to Minimum Wages: Evidence from Chinese Households (2017)
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