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Can an increase in the minimum wage standard force enterprises to innovate? Evidence from China

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  • Zheng Li
  • Fengshuo Liu
  • Shuai Mi

Abstract

This paper examines the impact of an increase in the minimum wage standard on enterprise innovation and its mechanism. Based on the matching data between China's A‐share listed enterprises and the city minimum wage standard from 2003 to 2018, we find that an increase in the minimum wage standard promotes enterprise innovation, and this impact is sustainable. Mechanism analysis shows that an increase in the minimum wage standard enlarges R&D investments and personnel to promote enterprise innovation. In addition, we find that an increase in the minimum wage standard has a stronger effect in promoting the innovation of large, labour‐intensive, high‐innovation or non‐state‐owned enterprises than the others.

Suggested Citation

  • Zheng Li & Fengshuo Liu & Shuai Mi, 2022. "Can an increase in the minimum wage standard force enterprises to innovate? Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3807-3819, December.
    • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:8:p:3807-3819
    DOI: 10.1002/mde.3630
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