Statistical Analysis of the Influence of Sino-U.S. Minimum Wages on Employment

Abstract

From 2004 to 2015, the minimum wage’s employment effect varied according to the minimum wage level, FDI, per capita gross domestic product, and labor production in 31 Chinese provinces. Regardless of the amount of investment, the minimum wage raise lowered hiring as FDI intake increased. In this research paper, we aim to study different scenarios that can help raise the minimum wage without harming employment. We will evaluate the influence of employment’s minimum wage change in China (world's largest emerging market) and the U.S. (the largest developed country) using co-integration regression analysis. The minimum wage system is a basic wage and social security system that the governments have used to interfere directly in labor market wages. The data enumerated and collected is from 2003 to 2016, which is published annually by both governments. Our emphasis is on the overall employment impact, accommodation, and foodservice industry impact. According to the findings, the minimum wage increase has a minor impact on overall employment in China. However, it has a beneficial impact on employment in the U.S. In China and the U.S., minimum wage raise has a significant beneficial influence on employment in the retail and foodservice industries. The impact on the U.S., however, is higher than on China.