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The effects of monthly minimum wages on the labor market

Author

Listed:
  • Yang, Zhengxiong
  • Liu, Mingwei
  • Zhang, Shiwei
  • Yin, Chenxi

Abstract

We explore the labor market impact of monthly minimum wages utilizing a model suitable for countries adopting monthly, weekly, or daily wage benchmarks. Our findings indicate that, in the absence of overtime regulations, an increase in monthly minimum wages will increase working hours and hourly wages and increase (or decrease) employment when the firm has high (or low) monopsony power. When incorporating overtime alongside its associated compensation, the implications of monthly minimum wages become contingent on the prevailing overtime premiums. We validate these assertions using microdata from China.

Suggested Citation

  • Yang, Zhengxiong & Liu, Mingwei & Zhang, Shiwei & Yin, Chenxi, 2024. "The effects of monthly minimum wages on the labor market," China Economic Review, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:chieco:v:88:y:2024:i:c:s1043951x24001998
    DOI: 10.1016/j.chieco.2024.102310
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    More about this item

    Keywords

    Monthly minimum wages; Labor market effects; Monopsony; Overtime premiums; China;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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