Minimum wages and employment in China

Fang, Tony; Lin, Carl

doi:10.1186/s40173-015-0050-9

“…This indicates that Chinese employees with low education level (i.e., below vocational school degrees) were directly and adversely affected by the policy. The results support prior study by Fang and Lin [10] that minimum wage increases in Eastern and Central regions of China negatively affects young adults, females and low-skilled employees. With the increase in minimum wage, firms are forced to increase their labour cost.…”

Section: The Impact Of Minimum Wage Policysupporting

confidence: 81%

The impact of minimum pay implementation on small businesses operating cost and sustainability: A case of service business

Rusly

¹

,

Talib

²

,

Salleh

³

2017

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Abstract. The implementation of minimum wage requirement in Malaysia beginning mid 2016 seems to impact both employees and employers in different ways. While this implementation could increase household income and claimed to boost employees' productivity, employers or business operators, on the other hand are experiencing stringent effect on their business operating cost. The effect is more significant for small business operators, including the childcare centers. Childcare industry operates in the service sector, which represents the main contributor of Malaysian SMEs. Unfortunately for the industry, there is an increasing numbers of childcare centers have to cease their operation due to inability to comply with the minimum pay requirement. In the absence of thorough understanding of the phenomena, the small businesses, particularly among institution-based childcare, is at the risk of losing their businesses. This exploratory study intends to assess how the implementation of minimum pay requirement affects the existing operating cost structure, and consequently business sustainability of Malaysian childcare industry.

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“…In East Asia a number of papers provide new evidence on minimum wage impacts for Thailand (Del Carpio, Messina and Sanz-de-Galdeano, 2014), Vietnam (Del Carpio and Liang, 2013;Nguyen, 2010), The Phillipines (Lanzona, 2012;Del Carpio, Margolis and Okamura, 2013), and Indonesia (Magruder, 2013;Comola and De Mello 2011;Harrison and Scorse, 2010). In China, Wang and Gunderson (2011) and Fang and Lin (2013) provide some of the first estimates of minimum wage effects, while in Latin America several new papers build on existing work and provide new results (Ham, 2013;Khamis, 2013). The literature on SSA, however, remains rather limited with published work existing only for four countries, namely Ghana (Jones, 1997), Kenya (Andalon and Pages, 2008), Malawi (Livingstone, 1995) and South Africa (Hertz, 2005;Dinkelman and Ranchhod, 2013;Bhorat et al, 2013Bhorat et al, , 2014Nattrass and Seekings, 2014).…”

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confidence: 99%

Minimum Wages in Sub-Saharan Africa: A Primer

Bhorat

¹

,

Kanbur

²

,

Stanwix

³

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Although the sectors and fraction of workers covered are small given the low rates of formality and urbanization in Sub-Saharan Africa (SSA), as the number of covered workers grows wage regulation will become increasingly significant. We find that higher minimum wage values are associated with higher GDP per capita. Importantly, however, we find that the minimum wage relative to the mean wage is higher in low income countries than in lowerand upper-middle income countries. Indeed, SSA as a whole reflects a bias towards a more aggressive minimum wage policy compared to the rest of the world. There is limited research on the employment effect of minimum wages in SSA, but the few findings are consistent with the broad summary of global research. By and large, introducing and raising the minimum wage has a small negative impact or no measurable negative impact. However, there is significant variation around this average finding -the employment elasticities are not constant nor linear. Where increases in a minimum wage are large and immediate, this can result in employment losses, but more modest increases usually have very little observably adverse effects and may have positive impacts on wages. The great variability in findings on employment could be due partly to the great variation in the detail of the minimum wage regimes and schedules country by country, but also by the variations in compliance. We find that higher Kaitz indices are associated with higher levels of non-compliance. The release of country-level earnings and employment data at regular intervals lies at the heart of a future country-focused minimum wage research agenda for Africa. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Minimum Wages in Sub-JEL Classification: J08, J20, J21, J30, J38

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“…Household consumption provides a particularly relevant metric of welfare because it is often better measured and less volatile than income, Deaton (1997), Deaton and Grosh (2000). 1 The effectiveness of minimum wage policies in developing countries has been questions for fears about unemployment risk, threats to an already precarious industrial competitiveness, and employment substitution into the informal labour market, Rama (2001), Fang and Lin (2015). And there are additional concerns why higher minimum wages may fail to translate into higher levels of consumption: first, higher minimum wages may simply substitute for other social transfers so that the effective income increase is considerably attenuated.…”

Section: Introductionmentioning

confidence: 99%

“…Unlike household survey data, firm-level data cannot not track the employment history of a worker. Fang and Lin (2015) find small negative employment effects of minimum wages using the Chinese urban household panel. Their estimated employment elasticity to minimum wage hikes is -0.05 in the full sample and -0.09 among young adults.…”

Section: Introductionmentioning

confidence: 99%

The Consumption Response to Minimum Wages: Evidence from Chinese Households

Dautović

¹

,

Hau

²

,

Huang

³

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Graduate Institute GenevaAbstract 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.JEL Classification: E24, J38, C26

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Minimum wages and employment in China

Cited by 63 publications

References 36 publications

The impact of minimum pay implementation on small businesses operating cost and sustainability: A case of service business

The impact of minimum pay implementation on small businesses operating cost and sustainability: A case of service business

Minimum Wages in Sub-Saharan Africa: A Primer

The Consumption Response to Minimum Wages: Evidence from Chinese Households

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