Arbeitspapier
Minimum Wage Competition between Local Governments in China
The theory of fiscal and regulatory competition between jurisdictions is more advanced than its empirical testing. This is particularly true of labor regulation in general, and minimum wage regulation in particular, and especially so for developing countries. This paper utilizes the spatial lag methodology to study city-level strategic interactions in setting and enforcing minimum wage standards during 2004-2012 in China. We manually collect a panel data set of city-level minimum wage standards from China's government websites. This analysis finds strong evidence of spatial interdependence in minimum wage standards and enforcement among main cities in China. If other cities decrease minimum wage standards by 1 RMB, the host city will decrease its standard by about 0.7-3.2 RMB. If the violation rate in other cities increases by 1 percent, the host city will respond by an increase of roughly 0.4-1.0 percentage points. The results are robust to using three estimation methods, Maximum Likelihood, IV/GMM and a dynamic panel data model. Our findings of strategic interactions suggest the need for policy coordination in labor regulation in China.
- Language
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Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 11893
- Classification
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Wirtschaft
Wages, Compensation, and Labor Costs: Public Policy
- Subject
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minimum wage
enforcement
race to the bottom
strategic interactions
China
- Event
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Geistige Schöpfung
- (who)
-
Li, Yanan
Kanbur, Ravi
Lin, Carl
- Event
-
Veröffentlichung
- (who)
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Institute of Labor Economics (IZA)
- (where)
-
Bonn
- (when)
-
2018
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Li, Yanan
- Kanbur, Ravi
- Lin, Carl
- Institute of Labor Economics (IZA)
Time of origin
- 2018
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