A Comparative Study of Minimum Wage and Employment in China and in the United States

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Published Dec 9, 2019
DOI https://doi.org/10.28934/ea.19.52.2.pp1-11

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Jianfeng Yao
North Carolina A&T State University, United States
Duanxiang Fu
Research Center for Energy Economics, School of Business Administration, Henan Polytechnic University, China

Abstract

In this paper, we use regression models to analyze and compare the effect of a change in real minimum wage on employment rate both in China (the largest emerging market) and in the United States (the largest developed country). The longitudinal data we use is from 2000 to 2016 published by both countries. After controlling for unobserved heterogeneities by using the fixed effect estimations, the results show a significant and negative correlation between real minimum wage and employment rate in both countries, with a smaller and weaker effect of real minimum wage in China. It indicates that employment in China is less responsive to a change in minimum wage because of its unique economic system. In addition, We find that the effect of minimum wage on employment rate turns into insignificant in recent years in China since 2008, which is the opposite of and different from the situation in the U.S.

Article Details

Issue
Vol 52 No 2 (2019): Economic Analysis: Applied Research in Emerging Markets
Section
Articles
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