The Income Distribution And Efficiency Consequences Of The Minimum Wage

Since the late 19th century,the minimum wage system has drawn the attention of academics and government departments,but there is still much controversy over its social and economic effects.Enterprises are the micro-entities that implement the minimum wage system.Low income workers are the object of guaranteed by the minimum wage system.Both enterprises and workers make behavioral adjustments to the system.The effect of the minimum wage system is the result of dynamic adjustment by enterprises and workers.Under the background that our economy is in a new normal,the unbalanced and inadequate development,and the income gap is too large,it is of great theoretical and practical significance to study the effect of the minimum wage system on income distribution and enterprise productivity.This paper explores whether the minimum wage system plays the role of raising the labor income share,improving the income distribution pattern and enhancing the production efficiency of enterprises from the micro level of enterprises.Based on the literature review,the paper first analyzes the mechanism that the minimum wage affects the income distribution and the production efficiency of enterprises.The direction of the impact of the minimum wage on income distribution is unclear and there is a positive impact on the productivity of enterprises.Secondly,based on the discussion of the endogenous of minimum wage,the paper constructs fixed effect model and IV model to estimate the impact of minimum wage using Chinese Industrial Enterprises Database.Last,through changing important variables and constructing triple difference model,we do the robust analysis.This paper draws the following conclusions:First,The increase of the minimum wage has a positive impact on the labor income share.The implementation of the minimum wage system helps improve china's income distribution pattern.Second,the increase of the minimum wage has a positive impact on the total factor productivity of enterprises.Third,enterprises will make adjustments to the minimum wage system,such as product substitution and capital substitution.These actions will then adjust the impact of the minimum wage system.Fourth,the income distribution effect and the productivity impact effect of the minimum wage system are different among different types of enterprises.For example,labor intensive enterprises are more affected than capital intensive enterprises.