The effect of minimum wage on firm markup: Evidence from China |
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| Institution: | 1. The Research Institute of Economy, Trade and Industry, 1-3-1, Kasumigaseki, Chiyoda-ku, Tokyo 100–8901, Japan;2. Faculty of Political Science and Economics, Waseda University, 1-6-1 Nishiwaseda Shinjuku-ku, Tokyo 169–8050, Japan;1. KDI School of Public Policy and Management, 263 Namsejong-ro, Sejong-si, 30149, Republic of Korea;2. Korea Development Institute, 263 Namsejong-ro, Sejong-si, 30149, Republic of Korea;1. Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen, China;2. Department of Economics, School of Economics, Xiamen University, China;3. Department of Economics, Colgate University, Hamilton, NY, United States |
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| Abstract: | Our paper examines the impact of minimum wage on firm markup in China. We find that minimum wage generates a positive effect on firm markup. More value-enhancing innovative activities, TFP improvement, and efficient labor resource allocation are the potential channels. Further, the positive influence of minimum wage is more pronounced for privately-owned firms, for firms with higher labor intensity and firms with less financial constraints. Besides, these findings are generally robust to different estimation methods. Our results provide new insights into understanding the channels through which labor regulation may cause the change of markup for the emerging markets countries. |
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| Keywords: | Minimum wage Firm markup China |
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