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The Effects of the Minimum-Wage Policy on the Wage Distribution in Urban China

Using the CHIP survey data, this study analyzes the effects of the minimum wage (MW) policy on wage distribution in urban China from 1993 to 2013. Several major conclusions emerge. Ordinary least squares and quantile regression model estimates show that the MW affected both the average wage and the wages of the low-wage groups during 1993–1995, 1998–2002, and 2007–2013, with the greatest effect during the 1993–1995 period. Neumark, Schweitzer, and Wascher model estimates indicate that the change in the MW level affected changes in the wage level for low-wage groups during 1993–1995 and 1998–2002, with the greatest effect during the 1993–1995 period. A difference-in-differences model indicates that even when heterogeneity problems are addressed, the MW considerably affected the wage levels of low-wage groups during all three periods. All of the estimation results reveal the presence of a spillover effect in 1993–1995 but not in 1998–2002 or 2007–2013.