The Income Effect And Employment Effect Of Minimum Wage

The minimum wage has been practiced in China for more than 20 years.As one of the important ways to protect low-income labors,the purpose of the minimum wage is to maintain the basic life of low-income labors and balance bargaining power between low-income labors who are at a disadvantage status in the labor market and employers.Reasonable and effective minimum wage should be able to guarantee the workers to work with dignity and do not have negative impact on their employment.However,we still need to find out if the minimum wage can really improve the income of labors without damaging their employment.This is a question to be explored in this article.By manually collecting the minimum wage data all over the cities in different years,using of 2012?2014 and 2016 micro tracking survey data form China's Labor force Dynamics Survey(CLDS)of social science research center of Sun Yat-sen University and the macroscopic statistical data of all the cities in China,making use of the fixed effect model of panel data and the instrument variable method,this paper makes an empirical analysis on the impact of the rise of the minimum wage on the income and employment of labors.From the perspective of the overall labor force,raising the minimum wage standard significantly increases the wage income of the labor force without harming employment.In the subsample regression,both male and female labors are benefited by the increase in the minimum wage.But for low-income labors,although their wage income has been significantly improved,their employment has also been damaged.Through the above research,we hope that the results can provide reasonable basis for the government making the minimum wage policy and targeted policies for different workforce,especially for low-income groups,whose target is to make the low-income labors can share the fruits of economic development and promote the healthy development of society.