Minimum Wage and Outward FDI from China

Fan, Haichao; Lin, Faqin; Tang, Lixin

doi:10.1016/j.jdeveco.2018.06.013

Cited by 108 publications

(64 citation statements)

References 39 publications

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“…Our control variables are minimum wage and TFP. While TFP is measured at the firm level and is constructed from our firm‐level data using the Olley‐Pakes method, minimum wages are measured at the city level and are drawn from Fan Lin and Tang (). Since minimum wage data are available only from 2000 onwards (until 2007), we use the average annual minimum wage growth rate in each city between 2000 and 2003 to extrapolate the series back to 1999 and 1998.…”

Section: Datamentioning

confidence: 99%

“…Our control variables are minimum wage and TFP. While TFP is measured at the firm level and is constructed from our firm-level data using the Olley-Pakes method, minimum wages are measured at the city level and are drawn from Fan Lin and Tang (2018). 31 Since minimum wage data are available 27 The NBS classifies non-state-owned enterprises to include collectively owned enterprises, Chinese indigenous privately owned enterprises, and foreign-owned enterprises operating in China.…”

Section: Datamentioning

confidence: 99%

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Trade liberalisation and labour shares in China

2019

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We estimate the extent to which firms responded to tariff reductions associated with China's WTO entry by altering labour's share of value. Firm‐level regressions indicate that firms in industries subject to tariff cuts raised labour's share relative to economy‐wide trends, both through input choices and rent sharing. Our estimates suggest that, on average, an industry that experienced no reductions in output or input tariffs would have a 15.7% lower labour share of value in 2007 than it actually did, assuming the same economy‐wide trends. There is significant variation across firms: the impact attenuates with geographic remoteness and union presence and strengthens with foreign ownership.

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Section: Datamentioning

confidence: 99%

Section: Datamentioning

confidence: 99%

Trade liberalisation and labour shares in China

2019

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“…As China's domestic labor costs continue to increase, foreign investment motivated by lower labor costs will gradually increase [49]. By using a number of macro-economic variables, spatially-correlated confounding factors and studying the effect of minimum wage on FDI, Fan et al [50] concluded the increase of minimum wage in China can account for 32.3% of the increasing OFDI. Empirical evidence has significant correlation that foreign firms in Indonesia pay higher wages for labor compared to local firms, and the existence of more foreign firms in a province has raised the level of wages in a region [51].…”

Section: Human Resourcesmentioning

confidence: 99%

China’s Outward FDI in Indonesia: Spatial Patterns and Determinants

Supriyadi

Wang

2018

Sustainability

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China has gradually become an important world investor with the implementations of its “Going Global” and “Belt and Road” strategy initiatives. Indonesia is the world’s largest archipelagic country, and has the largest economy of the ASEAN (Association of Southeast Asian Nations). Therefore, Indonesia is an important node for China’s implementation of its “Belt and Road” initiative. However, the existing research results regarding China’s OFDI (Outward Foreign Direct Investment) in Indonesia have indicated that little focus has been placed on the distribution patterns and determinants at the provincial levels. In this study, spatial analysis and mathematical statistics methods were used to analyze the temporal and spatial pattern evolution characteristics of China’s OFDI in Indonesia for the period ranging from 2006 to 2016. Also, the mechanism of the pattern evolution was quantitatively identified. The results obtained in this research study indicated the following: (1) China’s OFDI in Indonesia was observed to be characterized by fluctuations in investment amounts and rising numbers of investment projects, also, the investment amounts and number of projects were spatially dispersed; (2) the overall spatial evolution of China’s OFDI in Indonesia was found to be characterized by certain patterns, such as “west higher than the east, and south higher than the north” patterns. Moreover, the direction of the investment gravity center was determined to be obviously distinct during different periods; (3) high-level investments were found to be focused in only a few provinces, meanwhile, the majority of the provinces continued to be in a low-level stable state of investment from China; (4) this study’s OLS (Ordinary Least Square) regression and step-wise regression models revealed that institutional factors, political relations, and human resources were the most important factors which had affected China’s OFDI in Indonesia during the study period.

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“…This paper relates to a growing literature on firm-level effects of minimum wages in developing countries. Much of this literature studies the effect of changes in regional minimum wages in China (e.g., Fan, Lin, and Tang 2018;Gan, Hernandez, and Ma 2016;Long and Yang 2016). In particular, Mayneris, Poncet, and Zhang 5 (2018) make an important contribution to the literature by using a 2004 reform of minimum wages in China to set up a difference-in-differences estimation.…”

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confidence: 99%

Minimum Wages and Firm-Level Employment in a Developing Country

Sjöholm

2020

SSRN Journal

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The effect of minimum wages on employment is a matter of debate, and the existing empirical literature contains mixed results. One reason for this is the methodological difficulties involved where changes in minimum wages are endogenous to other important economic changes. To overcome this problem, we examine exogenous changes to local minimum wages in Indonesia between 1989 and 1994. Our natural experiment results from a national policy change: from minimum wages being determined by local guidelines and criteria to minimum wages being harmonized and set according to nationwide criteria. We examine how these changes in minimum wages affect employment, considering the effect both on employment within plants and on exit of plants. Our results show no evidence of an effect of minimum wages on employment in Indonesian plants. One explanation found in the data is that higher minimum wages force plants to increase productivity, which in turn enables them to retain their labor force, despite higher wage costs.

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Minimum Wage and Outward FDI from China

Cited by 108 publications

References 39 publications

Trade liberalisation and labour shares in China

Trade liberalisation and labour shares in China

China’s Outward FDI in Indonesia: Spatial Patterns and Determinants

Minimum Wages and Firm-Level Employment in a Developing Country

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