China &World Economy / 61–80, Vol. 22, No. 1, 2014 61
©2014 Institute of World Economics and Politics, Chinese Academy of Social Sciences
Employment and Working Hour Effects of Minimum
Wage Increase: Evidence from China
Peng Jia*
Abstract
Using a difference-in-differences model, the present paper provides empirical evidence of
minimum wage effects on employment and working hours in China. The results show that
male employment is not affected by a minimum wage increase, although men’s working
hours do increase. In contrast, female employment is more likely to be negatively affected by
a minimum wage increase, while their working hours remain unchanged. This may lead to
women being in a more disadvantaged position in the workforce, and adopting a monthly
minimum wage may induce firms to extend men’s working hours. Therefore, to better
protect disadvantaged workers, we suggest that minimum wage regulation should focus on
the target group of less-educated women, and that a unified minimum hourly wage needs to
be set for both full-time and part-time workers. Meanwhile, the importance of human capital
accumulation should be addressed in alleviating the negative effects of minimum wage
increases.
Keywords: difference-in-differencesmodel, employment, minimum wage, working hours
JELcodes: J22, J31, J38
I. Introduction
Minimumwage regulation is widely-used in labor markets around the world to ensure basic
living standards are met by workers. However, there is still no consensus on the effects of
establishing a minimumwage. SinceChina issued its first minimumwage regulation in 1993,
both the coverage and the absolute level of minimum wage have increased. However, there
is still not enough evidence on how minimum wage increases affect disadvantaged workers;
*Peng Jia, Postdoctoral Researcher, Institute of Population and Labor Economics, Chinese Academy of Social
Sciences, Beijing, China. Email: jiapeng@jiapeng.org. The author is grateful for financial support from the National
Social Science Foundation of China (Grant No. 13CYJ017), the China Postdoctoral Science Foundation (Grant
No. 2012M520506) and the Ministry of Education of China (Grant No. 12JJD790042).