Impact of Minimum Wage on Wage Distribution and Wage Gap Between Rural and Urban Registration Groups

Abstract

The minimum wage policy is expected to increase the wage level for low-wage group, reduce the poverty and narrow income inequality between high-wage group and low-wage group. Thus, the minimum wage implementation is an important labor policy in both developing and developed countries. Does the minimum wage policy have these effects in China? Chapter 7 analyzes the effects of minimum wage policy on wage levels and wage gap between the rural and urban registration groups in China and provides new evidence for the issue on the effects of minimum wage policy on labor market outcomes. It is found that even though the 1997 minimum wage policy implementation positively affects the wage for both rural and urban registration groups, the enforcement policies of both 2004 and 2008 minimum wage policies have not positively influences on the low-wage group, which may be caused by the minimum wage compliance problems in the private sector and the self-employed sector.