Abstract
This chapter uses Chinese Household Income Project (CHIP) survey data for 2007 and 2013 to examine changes in compliance with minimum wages and overtime laws and finds that the proportion of employees earning less than the monthly minimum wage was 3.91% in 2007 and 7.32% in 2013. However, when considering overtime hours, and calculating an implicit hourly wage, the proportion of workers earning less than the hourly minimum wage is much higher than the proportion earning less than the monthly minimum wage (13.64% in 2007 and 12.59% in 2013). This is because many low-wage workers are required to work overtime hours with no additional pay. When comparing 2007 and 2013, the authors find that the proportion of workers earning below the monthly minimum wage rose while the proportion earning below the hourly minimum wage fell. This occurred because the working hours of low-skill workers decreased substantially from 2007 to 2013. The authors argue that the decline in unpaid overtime hours was related to the increased compliance with overtime pay regulations after the 2008 Labor Contract Law. Finally, the authors find that while the fraction of workers earning below the hourly minimum wage fell between 2007 and 2013, the average wage shortfall of workers earning below the minimum wage increased. This is because increased enforcement leads to partial compliance with minimum wage laws, where employers increase the earnings of those just below the minimum wage to the minimum wage, but continue to pay those with very low human capital below the minimum wage.
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Ye, L., Gindling, T., Li, S. (2020). Compliance with Legal Minimum Wages and Overtime Pay in China, Effects Across the Distribution of Wages. In: Li, S., Lin, C. (eds) Minimum Wages in China. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-15-2421-9_9
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DOI: https://doi.org/10.1007/978-981-15-2421-9_9
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