Impact of Minimum Wage Standard on Occupational Income Inequality and Common Prosperity in China

To achieve the common prosperity is an inevitable goal for the Chinese-style modernization. As an important policy tool for regulating income distribution in the labor market, it is greatly significant to see whether it can effectively lowering and cover the bottom. Using micro-data from the China Household Dynamics Tracking Survey, this paper measures the degree of inequality within occupations in China and explores the impact of the China's minimum wage standard on residents' occupational income inequality. Our empirical results show that for every 100 RMB yuan increase in the minimum wage standard, the Gini coefficient, which measures the level of income inequality among residents, drops by 0.318, which has an obvious economic effect. Income effect analysis results show that for every 100 RMB yuan increase in the minimum wage standard, income inequality for people in the high unequal income group falls remarkably by 0.362. The middle group has the weakest impact effect, and income inequality for people in the low unequal income group falls by only 0.126. This finding shows that the income effect brought about by the increase in the minimum wage standard is mainly reflected in the truncation effect on low-income people. By directly raising their income levels, the wage gap between low- and middle-income people has been reduced, and the level of income inequality has been reduced. Therefore, the improvement of the China's minimum wage standard in the future should be based on priority employment policies, starting with the goal of lowering the minimum wage standard and safeguarding the lives of low-income groups, and steadily promoting the common prosperity and making the substantial progress.