An Analysis Of The Employment Effect Of Chinese Minimum Wage System

Minimum wage system is the way that the government directly intervene the labor price.It aims to promote the employment of the labor force,narrow the income gap,preventing the polarization between the rich and the poor,stabilizing the social and public sentiment,alleviating the contradiction between the employers and employees.The number of China's labor force is huge,the relative excess supply of labor cause the low price level.How to promote employment and ensure legal wage of labors from damage effectively has become a difficult problem.In addition,the strength and status of the labor market in our country are not equal,the strength of laborers,especially low-income laborers are relatively weak,lack of equal voice in a disadvantage position,and the legitimate rights and interests of laborers are vulnerable,and using legal weapon of safeguarding rights consciousness is relatively weak.In addition,the labor market is not perfect in the supervision and control mechanism.The union lack of independence.It is difficult to maintain the basic legal rights and interests of laborers.In March 2004,the Ministry of Human Resources and Social Security formally promulgated the Minimum wage requirement,marking the formal establishment of Chinese minimum wage system.Chinese minimum wage system from the establishment and continuous improvement has gone through thirteen years,and achieved some success: adjusting the minimum wage standard?frequency?amplitude is in order to enhance the feasibility of the minimum wage.Since the Third Plenary Session of the Eighteenth Central Committee of the Party,with the deepening of reform and opening up,narrowing the income gap and establishing a shared economy is the task of building a well-off society in the new period and the key to realizing social harmony.At present,scholars at home and abroad on the minimum wage and employment effect hold different views,obtaining different conclusion from the theoretical and empirical perspective.How to improve the employment situation through the minimum wage is more and more important.Firstly,the paper systematically reviews the domestic and foreign literature on the employment effect of the minimum wage,and makes a theoretical basis for the research.Secondly,the theoretical model of the minimum wage employment effect under different types of market is analyzed systematically.In the full coverage model in a fully competitive market,the implementation of the minimum wage will cause the unemployment level to rise in the short-term;the unemployment rate depends on the flexibility of the labor supply and demand curve and the minimum wage level.Under substitution effect of capital to labor,further exacerbate the labor unemployment in the long term.In the two-sector model,the covered the minimum wage sector,due to higher wage levels,exacerbated the employment pressure in the least-paid sector,reduced the wage level,resulting to widen income gap between the two sectors.In the exclusive monopoly of the market,due to only have one labor demand side,in the short term,benefiting from the marginal cost of labor,the employment level of the labor force is rising.In the long run,raising the minimum wage increases in average labor cost,squeezing the profit margins,resulting in employment levels decreased.The minimum wage can also have a positive impact on the employment through the income distribution effect,the incentive effect and human capital investment.The minimum wage increases the individual income,enlarges the labor demand for the laborers,Under the influence of the incentive effect,effectively stimulate the labor productivity,at the same time,guarantees the cost of human capital investment and increases the human capital,transform into efficient productivity,improve the profit margins of enterprises,drive enterprises to expand the scale of production,increase the demand for labor.Thus,the employment effect of the minimum wage can't be determined from the theoretical level.Thirdly,collecting relevant data of the minimum wage from 2004 to 2015,and analyzing minimum wage operation model,links between minimum wage and average wage and per capita GDP.Pointed out that the minimum wage exist problems,including the minimum wage of the legislative level is low,applicable to the scope of the subject with limitations,irregularities and regulatory system is imperfect.Furthermore,select panel data of 31 provinces from 2004 to 2015.Use the EGLS empirically to analyze the employment effect of the minimum wage.Finally,Suggestions on optimizing the minimum wage in China,including raising the legal status of the minimum wage to enhance the legal effect of the minimum wage;Broadening the applicable subject and scope of the minimum wage;Refine the minimum wage classification;Vigorously promote the minimum wage policy,raise awareness of the minimum wage;Establish and improve the minimum wage supervision system;Improve the minimum wage and employment supporting measures.