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Minimum wage and export: evidence from Chinese firm-level data

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  • Ma, Shuang
  • Sun, Churen
  • Tian, Guoqiang

Abstract

This paper proposes a two-country trade equilibrium model with heterogeneous firms to investigate the influences of minimum wages and productivity on firms' exports. It shows that the influence of minimum wages on firms' exporting probability and foreign sales is negative while that of firms' productivity on their exports is positive. Econometric analysis based on the Annual Survey of Chinese Industrial Firms as well as the data of minimum wages collected ourselves from 1998 to 2007 verifies these predictions. Holding the other variables constant, if minimum wages and their productivity increase by 100%$, then the elasticity of minimum wage on firms' exporting sales is -8.6% while that of firms' productivity is 75.6%, and firms' exporting possibility decreases by 1.1%$ and increases by 1.6%$, respectively.

Suggested Citation

  • Ma, Shuang & Sun, Churen & Tian, Guoqiang, 2011. "Minimum wage and export: evidence from Chinese firm-level data," MPRA Paper 35098, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35098
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    References listed on IDEAS

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    More about this item

    Keywords

    Minimum wage; heterogeneous firm; productivity; export;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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