The Impact Of Global Value Chain On Minimum Wage

The participation of Global Value Chain can significantly affect a country's minimum wage level,and make a very important impact on the income of the least affluent people in the country.This paper use two indictors-the Degree of Global Value Chain and the Position of Global Value Chain-to measure a country's participation in the Global Value Chain in a solid way,and analyze the theoretical mechanism of the impact of the participation in Global Value Chain on the level of minimum wage.Based on the OECD Trade in Value Added database,this paper uses 40 countries' panel date from 2005 to 2016 to make an empirical research on the mechanism.The result indicates that:the Degree of Global Value Chain has significant negative impact on the minimum wage level,and the Position of Global Value Chain has significant positive impact on the minimum wage level.Specifically,for every change of 0.1 units of the Degree of Global Value Chain,the level of minimum wage changes by 8.2%in the opposite way;for every change of 0.1 units of the Position of Global Value Chain index,the level of minimum wage changes by 20.6%correspondingly.The change of the Degree and Position of Global Value Chain reflects the change of one country's structure demand for labor at home and abroad,which further promotes the change of minimum wage level.In order to ensure the robustness of the result,this paper divides the sample data into developed and developing countries for sub-sample regression and the results are still robust.Specifically in developed countries,the level of minimum wage varies 9.8%in the opposite way for every change of 0.1 units of the Degree of Global Value Chain,and 24.4%correspondingly for every change of 0.1 units of the Position of Global Value Chain index.On the one hand,the result indicates that in the process of economic development,the higher the countries are in the upstream of Global Value Chain,the higher their minimum wage levels,and the reform of China's export-oriented economy to the domestic demand-based economy model also promotes the increase of the minimum wage.On the other hand,it is pointed out that improving the Position of Global Value Chain index can not only enhance national competitiveness and reduce international economic volatility,but also be a powerful measure to increase the income of the least affluent people and narrow the wealth gap between the rich and the poor.