Minimum Wages and Firm Employment

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  • Minimum Wages and Firm Employment Book Detail

  • Author : Yi Huang
  • Release Date : 2014-10-16
  • Publisher : International Monetary Fund
  • Genre : Business & Economics
  • Pages : 47
  • ISBN 13 : 1498332307
  • File Size : 52,52 MB

Minimum Wages and Firm Employment by Yi Huang PDF Summary

Book Description: This paper provides the first systematic study of how minimum wage policies in China affect firm employment over the 2000-2007 periods. Using a novel dataset of minimum wage regulations across more than 2,800 counties matched with firm-level data, we investigate both the effect of the minimum wage and its policy enforcement tightening in 2004. A dynamic panel (difference GMM) estimator is combined with a “neighbor-pairs-approach” to control for unobservable heterogeneity common to “border counties” that are subject to different minimum wage changes. We show that minimum wage increases have a significant negative impact on employment, with an estimated elasticity of -0.1. Furthermore, we find a heterogeneous effect of the minimum wage on employment which depends on the firm's wage level. Specifically, the minimum wage has a greater negative impact on employment in low-wage firms than in high-wage firms. Our results are robust for different treatment groups, sample attrition correction, and placebo tests.

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