The Impact of Minimum Wage Policy on Wages and Employment in China

This paper evaluates the efficacy of the minimum wage in China using some version of a before-and-after research (Brown, 1999, Sara Lemos, 2004). By examining wages and employment effects together, we find that an increase in the minimum wage strongly compresses the wages distribution, has small adverse effects on employment in China. The main contribution of this paper is to present new evidence on the effects of minimum wage in china, which provide an explanation for the small employment effects prevalent in the literature and help to understand the effects of the minimum wage in china.