Employment and Working Hour Effects of Minimum Wage Increase: Evidence from China

Abstract

AbstractUsing a difference‐in‐differences model, the present paper provides empirical evidence of minimum wage effects on employment and working hours in China. The results show that male employment is not affected by a minimum wage increase, although men's working hours do increase. In contrast, female employment is more likely to be negatively affected by a minimum wage increase, while their working hours remain unchanged. This may lead to women being in a more disadvantaged position in the workforce, and adopting a monthly minimum wage may induce firms to extend men's working hours. Therefore, to better protect disadvantaged workers, we suggest that minimum wage regulation should focus on the target group of less‐educated women, and that a unified minimum hourly wage needs to be set for both full‐time and part‐time workers. Meanwhile, the importance of human capital accumulation should be addressed in alleviating the negative effects of minimum wage increases.