Impact of minimum wage on gender wage gaps in urban China

Shi Li,Xinxin Ma

doi:10.1186/s40175-015-0044-4

Abstract

This paper provides evidence on whether the minimum wage (MW) has affected gender wage gaps in urban China. Several major conclusions emerge. First, from 1995 to 2007, the proportion of workers whose wages were below the regional MW level was greater for female workers than for male workers. Second, the results obtained by using the difference-in-differences estimation method show that from a long-term perspective, the MW will help to reduce gender wage gaps and that the effect is more obvious for the low-wage group. However, in the short term, the amelioration effect is not obvious. JEL classification: J31, J48, J71

Highlights

1 Introduction Does the minimum wage (MW) policy that has been enforced since 1993 affect gender wage differentials in China? In this paper, we provide evidence on this issue
Card and Krueger (1995) conducted a study on the effects of changes in the MW level from 1989 to 1992 on changes in wage gaps in the U.S Using a natural experiment model based on the MW system change, in which the MW level was increased in some states in 1990 and 1991, they indicated that the Minimum Wage Act pulled up the incomes of low-wage workers and narrowed the regional wage gap
7 Conclusions In urban China, the gender wage gap was small during the period of planned economy; during the economy transition period, after the 1990s, when SOEs were further reformed, the gender wage gap gradually increased

Summary

Introduction

Does the minimum wage (MW) policy that has been enforced since 1993 affect gender wage differentials in China? In this paper, we provide evidence on this issue. While the main objective of MW implementation is to increase the wage level of low-wage groups, most studies only focus on the effect of MW on low-skill worker employment (which appears to be the most important issue). Card and Krueger (1995) conducted a study on the effects of changes in the MW level from 1989 to 1992 on changes in wage gaps in the U.S Using a natural experiment model based on the MW system change, in which the MW level was increased in some states in 1990 and 1991, they indicated that the Minimum Wage Act pulled up the incomes of low-wage workers and narrowed the regional wage gap. Shannon (1996) utilized the Canadian Labor Force Survey data in 1986 and the Oaxaca-Blinder decomposition method to conduct a relevant study that shows that the MW narrowed the gender wage gap among the population aged 16 to but had little effect on those aged to 64.

Methodology and data

Descriptive statistics results

Econometric analysis results

Findings

Conclusions