[Working Paper No.14]Xianghong Wang, Xinyi Tan: Minimum Wage Impact on Wages, Work, and Income Inequality for Migrant Workers in China
Xianghong Wang; Xinyi Tan
Published: 2014/2/10 17:39:20    Updated time: 2014/2/10 23:25:06
Abstract: This paper studies the impact of minimum wage policies in China on migrant workers’ income and employment. We use rural household data from 2003-2006 containing information about migrant workers’ wage income and their working days. We employ difference-in-difference (DID) method and the method of average treatment on the treated (ATT) to examine the effects of minimum wage increases in 2004 and 2005. We find that the net wage impact for migrant workers is ositive and the net impact on working days is negative after controlling for individual characteristics and provincial effects. We also examine how different income groups are affected by minimum wage adjustments. We find that minimum wage change rate has positive effect on wage increase for migrant workers whose wages are much lower than the minimum wage level, but has no significant impact on workers in other income levels. Controlling for the minimum wage effects, income inequality within migrant workers have been increased.
Keywords: Minimum wage; Migrant workers

Authors:

    Xianghong Wang, Renmin University of China, shwang06@ruc.edu.cn;

    Xinyi Tan, Renmin University of China, tanxinyi09@ruc.edu.cn;

 

 1． Introduction

Minimum wage legislations have been widely used across provinces in China as a way to raise the living standard of low income workers in the past decade. Few studies have examined the minimum wage (MW) effects using micro-level data in China. Most studies on minimum wage effects using micro-level data have been conducted in developed countries. Since migrant workers account a large part of the low-income labor force in China, it is important to examine the welfare impact of minimum wage policies on this group of workers. Internal migrant workers in China have played an important role in China’s economic development, providing a pool of workers for its expanding export industries, and through remittances transferring income from the centers of industrialization to the rural interior.   According to the latest release of the National Bureau of Statistics of China (NBSC), rural migrant workers amounted to 252.78 million 2011, with 158.63 million of them working out of their hometowns for more than six months. The population of internal migrants poses unique problems for economic policy including labor policies such as minimum wage standards.
 
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