Research On The Influence Of Minimum Wage Level On The Quality Of Imported Intermediate Products

To ensure and improve people’s livelihood,the Chinese government has constantly raised the minimum wage,strengthened enforcement of laws related to the minimum wage,and increased the income of low-income people.Early in 1993,our country began to introduce minimum wage system,to 2004,mainland area comprehensive implementation of minimum wage system,and then in 2007 promulgated "Labor Contract law",minimum wage level with the rapid development of economy also rose,also led to the social average wage rising.However,for enterprises,the labor cost of Chinese enterprises is rising.At the Central Economic Work Conference in 2012,the Central government made it clear to "actively increase imports".At present,under the new development pattern of accelerating the construction of domestic large circulation as the main body and promoting domestic and international double circulation,we should take the initiative to expand the scale of import and optimize the quality of imported intermediate products.The importance of imports to our country’s foreign trade is also strengthening.As the main component of global goods trade,the intermediate goods trade plays a more and more important role in our country.It occupies a rising proportion of import trade.In terms of internal production,labor force and imported intermediate products are embedded with certain skills and technologies,which can produce complementary effects in the production process.And when they produce or supply the same factor of production,they can substitute for each other to some extent.Therefore,this paper first calculates the product quality of intermediate goods,standardizes the obtained values,and further discusses the relationship between minimum wage and the quality of intermediate goods imported by enterprises from the perspective of internal production,and draws the conclusion that(1)the rise of minimum wage will have a positive impact on the quality of intermediate goods imported by enterprises.The conclusion also passes a series of robustness tests: In this paper,the elasticity of substitution of differentiated products is first replaced by the mean and median.Secondly,the quality of imported intermediate goods is replaced by the type of imported intermediate goods.Finally,the intermediate entering and exiting enterprises are removed.Secondly,this paper also uses the logit and probit binary selection models to judge the impact of minimum wage on the behavior of intermediate goods imported by enterprises,and finds the conclusion(3)that the rise of minimum wage can also expand the probability of intermediate products imported by Chinese enterprises when they are encouraged to import higher quality intermediate goods.As for the endogeneity problem,this paper firstly selects Suzhou and Shenzhen with similar economic development levels as the control group and the control group by using the difference difference method,and finds that after the policy change,that is,after the rise of the minimum wage in Shenzhen,the quality of intermediate goods imported by enterprises in Shenzhen is higher than that in Suzhou.Secondly,this paper selects boundary city matching samples and selects two adjacent prefecturelevel cities to overcome the endogeneity between cities caused by political economy and other aspects.Finally,this paper uses the method of instrumental variables to take the average minimum wage of other places in the same year and province except this city as the instrumental variable of this city’s minimum wage,and finally finds that the impact on import quality is still significant.In addition,in terms of heterogeneity test,this paper studied the differences of influences from seven aspects: production efficiency of enterprises,ownership structure,geographical location,industrial structure,intellectual property protection level of provinces,and development level of source countries.It is concluded that(4)when the productivity level of the enterprise is higher,foreign ownership,non-processing trade,the enterprise is located in the eastern region,labor-intensive industry,manufacturing industry,intellectual property protection level is higher,and the import source country belongs to OECD countries,the change of minimum wage level has a greater impact on the quality of the intermediate products imported by the enterprise.Subsequently,this paper further analyzes the mechanism of enterprise import and explains how minimum wage affects the quality of intermediate goods imported by enterprises from the perspective of technology-skill complementarity effect.The implementation of minimum wage reduces the employment opportunities of lowskilled employees(Neumark and Wascher,1992;CAI Weixian,2021),and the remaining high-level and highly skilled labor forces of enterprises can form skillstechnology complementaries with intermediate inputs with higher embedded technology levels,thus promoting enterprise R&D and innovation(Bas and Paunov,2021;Liu Kai Yan 2020).In other words,the behavior of importing intermediate goods may be affected by the quality of employees inside the enterprise,that is,the more highly skilled employees the enterprise has,the more it can promote the import of higher quality intermediate goods.Based on the above conclusions,this study also gives some policy suggestions:(1)continue to promote the development of minimum wage system,improve the quality of enterprise import;(2)Further promote the intermediate goods trade liberalization policy to help enterprises import high-quality intermediate goods;(3)Further improve the social security system to help the unemployed maintain their basic living needs;(4)Set up skill training institutions to improve the competitiveness of low-skilled employees;(5)Further enhance the innovation ability of enterprises and improve the competitiveness of domestic intermediate products.