{"title":"Effects of the Minimum Wage on Small Firms in China: Spillover Effects from Large Firms*","authors":"Qiaoyi Chen, Zhao Chen, Lin Guan","doi":"10.1162/asep_a_00844","DOIUrl":null,"url":null,"abstract":"Abstract This study investigates how minimum wage affects small firms through spillover effects from large firms. Using firm-level panel data from Anhui Province in China, we find that after a minimum wage increase, small firms will reduce workers’ wages and create jobs due to the inflow of displaced workers from large firms. This spillover effect is larger for micro firms and private firms, where minimum wage compliance tends to be lower. We also find that high-tech small firms are more affected than low-tech ones because of their greater demand for skilled labor. Our findings not only highlight the unintended consequences of minimum wage on small firms in China, but also help to explain the ambiguous employment effects of minimum wage on the covered sector in developing countries.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":5.3000,"publicationDate":"2022-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"3","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Asian Economic Papers","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1162/asep_a_00844","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 3
Abstract
Abstract This study investigates how minimum wage affects small firms through spillover effects from large firms. Using firm-level panel data from Anhui Province in China, we find that after a minimum wage increase, small firms will reduce workers’ wages and create jobs due to the inflow of displaced workers from large firms. This spillover effect is larger for micro firms and private firms, where minimum wage compliance tends to be lower. We also find that high-tech small firms are more affected than low-tech ones because of their greater demand for skilled labor. Our findings not only highlight the unintended consequences of minimum wage on small firms in China, but also help to explain the ambiguous employment effects of minimum wage on the covered sector in developing countries.
期刊介绍：
The journal Asian Economic Papers (AEP) is supported by several prominent institutions, including the Center for Sustainable Development at Columbia University in the United States. This shows that there is a strong emphasis on sustainable development within the journal's scope. Additionally, the Korea Institute for International Economic Policy in South Korea, the UN Sustainable Development Solutions Network (SDSN) in Malaysia, and the Economic Research Institute for ASEAN and East Asia in Indonesia also sponsor AEP. The articles published in AEP focus on conducting thorough and rigorous analyses of significant economic issues pertaining to specific Asian economies or the broader Asian region. The aim is to gain a deeper understanding of these issues and provide innovative solutions. By offering creative solutions to economic challenges, AEP contributes to the discourse and policymaking that impact the Asian economies and region as a whole.
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