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How Does the Minimum Wage Affect Firm Investments in Fixed and Human Capital? Evidence from China

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Minimum Wages in China

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Abstract

This chapter empirically analyzes the impact of Chinese minimum wage regulations on the firm decision to invest in physical and human capital. It exploits the geographical and inter-temporal variations of county-level minimum wages in a panel data set of all state-owned and all above-scale non-state-owned Chinese firms covering the introduction of the new Chinese minimum wage regulations in 2004. In the basic regressions including all Chinese firms, the authors find significant negative effects of the minimum wage on human capital investment rates and no overall effects on fixed capital investment rates. When grouping firms by their ownership structure, the authors find that these results hold for most firms, the only exceptions being that foreign-owned and state-owned firms have not reduced their human capital investment rates.

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Author information

Authors and Affiliations

  1. Institute for Employment Research (IAB), Nuremberg, Germany

    Tobias Haepp

  2. Bucknell University, Lewisburg, PA, USA

    Carl Lin

Authors
  1. Tobias Haepp
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  2. Carl Lin
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Corresponding author

Correspondence to Tobias Haepp .

Editor information

Editors and Affiliations

  1. Zhejiang Universityy, Zhejiang, China

    Shi Li

  2. Bucknell University, Lewisburg, PA, USA

    Carl Lin

Appendix

Appendix

See Appendix Table 11.11.

Table 11.11 Effects of labor market conditions on the minimum wage, 2004–2009
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Haepp, T., Lin, C. (2020). How Does the Minimum Wage Affect Firm Investments in Fixed and Human Capital? Evidence from China. In: Li, S., Lin, C. (eds) Minimum Wages in China. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-15-2421-9_11

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  • DOI: https://doi.org/10.1007/978-981-15-2421-9_11

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  • Publisher Name: Palgrave Macmillan, Singapore

  • Print ISBN: 978-981-15-2420-2

  • Online ISBN: 978-981-15-2421-9

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

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