The Income Effect of Minimum Wage for the Underclass: Is It Positive in China?

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World Review of Political Economy

Volume 8, Issue 4

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The Income Effect of Minimum Wage for the Underclass: Is It Positive in China?

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Author(s): Fusheng Xie , Ruilin Chen

Publication date (Print): Winter 2017

Journal: World Review of Political Economy

Publisher: Pluto Journals

Keywords: minimum wage, income effect, unconditional quantile regression

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Journal ID (doi): 10.13169

Journal ID (publisher-id): worlrevipoliecon

Title: World Review of Political Economy

Publisher: Pluto Journals

ISSN (Print): 2042891X

ISSN (Electronic): 20428928

Publication date (Print): Winter 2017

Volume: 8

Issue: 4

Pages: 503-541

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Publisher ID: worlrevipoliecon.8.4.0503

DOI: 10.13169/worlrevipoliecon.8.4.0503

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References

Acemoglu, D., and J. S. Pischke. 2003. “Minimum Wages and On-the-Job Training.” in Worker Well-Being and Public Policy , edited by S. W. Polachek, 159–202. Bingley, West Yorkshire: Emerald Group.
Allegretto, S. A., A. Dube, M. Reich, and B. Zipperer. 2013. “Credible Research Designs for Minimum Wage Studies.” ILR Review 70 (3): 559–92.
Bechtold, B. H. 2014. “Neoclassical Economics and Federal Policies.” Review of Radical Political Economics 46 (4): 496–501.
Bhaskar, V., and T. To. 1999. “Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition.” The Economic Journal 109 (455): 190–203.
Bhatia, R., and M. Katz. 2001. “Estimation of Health Benefits from a Local Living Wage Ordinance.” American Journal of Public Health 91 (9): 1398–1402.
Bink, B. 1962. “The Physical Working Capacity in Relation to Working Time and Age.” Ergonomics 5 (1): 25–28.
Bowles, S. 1973. “Understanding Unequal Economic Opportunity.” The American Economic Review 63 (2): 346–56.
Bowles, S. 1985. “The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models.” The American Economic Review 75 (1): 16–36.
Burke, E. 1800. “Thoughts and Details on Scarcity.” Charity Organisation Review 9 (102): 273–88.
Burkhauser, R. V., K. A. Couch, and D. C. Wittenburg. 1996. “Who Gets What from Minimum Wage Hikes: A Re-estimation of Card and Krueger's Distributional Analysis in Myth and Measurement: The New Economics of the Minimum Wage.” Industrial & Labor Relations Review 49 (3): 547–52.
Card, D., and A. B. Krueger. 1995a. Myth and Measurement . Princeton, NJ: Princeton University Press.
Card, D., and A. B. Krueger. 1995b. “Time-Series Minimum-Wage Studies: A Meta-analysis.” The American Economic Review 85 (2): 238–43.
CBO (Congressional Budget Office). 2014. “The Effects of a Minimum-Wage Increase on Employment and Family Income.” Washington, DC: The Congressional Budget Office.
Cheung, S. N. S. 2004. “Minimum Wage: The Bane of the Chinese Economy.” [In Chinese.] Southern Weekly , July 17.
Clark, J. B. 1899. The Distribution of Wealth: A Theory of Wages, Interest and Profits . New York: Macmillan.
David, H., D. Dorn, and G. H. Hanson. 2013. “The China Syndrome: Local Labor Market Effects of Import Competition in the United States.” The American Economic Review 103 (6): 2121–68.
Doucouliagos, H., and T. D. Stanley. 2009. “Publication Selection Bias in Minimum-Wage Research? A Meta-regression Analysis.” British Journal of Industrial Relations 47 (2): 406–28.
Drago, R. 1989–1990. “A Simple Keynesian Model of Efficiency Wages.” Journal of Post Keynesian Economics 12 (2): 171–82.
Dube, A. 2013. “Minimum Wages and the Distribution of Family Incomes.” A Paper Series Commemorating the 75th Anniversary of the Fair Labor Standards Act.
Dube, A. 2017. “Minimum Wages and the Distribution of Family Incomes.” IZA Discussion Paper, No. 10572. http://cdn.equitablegrowth.org/wp-content/uploads/2017/03/27134555/032817-WP-minimum-wages-and-family-incomes.pdf.
Dube, A., T. W. Lester, and M. Reich. 2010. “Minimum Wage Effects across State Borders: Estimates Using Contiguous Counties.” The Review of Economics and Statistics 92 (4): 945–64.
Dutt, A. K. 2003. “New Growth Theory, Effective Demand, and Post-Keynesian Dynamics.” in Old and New Growth Theories: An Assessment , edited by N. Salvadori, 124–57. Cheltenham: Edward Elgar.
Even, W. E., and D. A. Macpherson. 2003. “The Wage and Employment Dynamics of Minimum Wage Workers.” Southern Economic Journal 69 (3): 676–90.
Fang, C., and W. Dewen. 2003. “Migration as Marketization: What Can We Learn from China's 2000 Census Data?” China Review 3 (2): 73–93.
Firpo, S., N. M. Fortin, and T. Lemieux. 2009. “Unconditional Quantile Regressions.” Econometrica 77 (3): 953–73.
Fortin, N., T. Lemieux, and S. Firpo. 2011. “Decomposition Methods in Economics.” Handbook of Labor Economics 4: 1–102.
Ghosheh, N. 2013. Working Conditions Laws Report 2012: A Global Review . Geneva: International Labor Office.
Gregory, T. 2014. “When the Minimum Wage Bites Back: Quantile Treatment Effects of a Sectoral Minimum Wage in Germany.” ZEW-Centre for European Economic Research Discussion Paper, No. 14–133. http://www.sole-jole.org/15329.pdf.
Groves, R. M. 2006. “Nonresponse Rates and Nonresponse Bias in Household Surveys.” Public Opinion Quarterly 70 (5): 646–75.
Hashimoto, M. 1982. “Minimum Wage Effects on Training on the Job.” The American Economic Review 72 (5): 1070–87.
Hirsch, B. T., B. E. Kaufman, and T. Zelenska. 2015. “Minimum Wage Channels of Adjustment.” Industrial Relations: A Journal of Economy and Society 54 (2): 199–239.
Kahn, C., and D. Mookherjee. 1988. “A Competitive Efficiency Wage Model with Keynesian Features.” The Quarterly Journal of Economics 103 (4): 609–45.
Koenker, R. 2005. Quantile Regression . Cambridge: Cambridge University Press.
Koenker, R., and G. Bassett Jr. 1978. “Regression Quantiles.” Econometrica: Journal of the Econometric Society 46 (1): 33–50.
Krugman, P. 2015. “Walmart's Visible Hand.” New York Times , March 2.
Leonard, M. L., T. Stanley, and H. Doucouliagos. 2014. “Does the UK Minimum Wage Reduce Employment? A Meta-regression Analysis.” British Journal of Industrial Relations 52 (3): 499–520.
Lester, R. A. 1946. “Shortcomings of Marginal Analysis for Wage-Employment Problems.” The American Economic Review 36 (1): 63–82.
Levi, M., D. J. Olson, and E. Steinman. 2002. “Living-Wage Campaigns and Laws.” Working USA 6 (3): 111–32.
Linneman, P. 1982. “The Economic Impacts of Minimum Wage Laws: A New Look at an Old Question.” Journal of Political Economy 90 (3): 443–69.
Machado, J. A., and J. Mata. 2005. “Counterfactual Decomposition of Changes in Wage Distributions Using Quantile Regression.” Journal of Applied Econometrics 20 (4): 445–65.
Malthus, T. 1798. An Essay on the Principle of Population . Electronic Scholarly Publishing Project.
Marshall, A. 1890. Principles of Economics . 8th ed. London: Macmillan.
Marx, K. 1976. Capital , vol. 1. London: Penguin Books.
Marx, K., and F. Engels. 1976. Marx/Engels Collected Works , vol. 6. Moscow: Progress Publishers.
Matthaei, J., and P. Zarembka. 2015. “Economists Hit Back in the Minimum-Wage Wars.” Letter to Editor, New York Times , March 15.
Melly, B. 2005. “Decomposition of Differences in Distribution Using Quantile Regression.” Labour Economics 12 (4): 577–90.
Mill, J. S. 1848. Principles of Political Economy with Some of Their Applications to Social Philosophy . London: John W. Parker.
MWSC (Minimum Wage Study Commission). 1981. “The Minimum Wage: Its Relationship to Income and Poverty.” Washington, DC: U.S.G.P.O. The Congressional Budget Office. http://cbo.gov/sites/default/files/cbofiles/ftpdocs/61xx/doc6178/doc14a.pdf.
Neumark, D., M. Schweitzer, and W. Wascher. 2004. “Minimum Wage Effects throughout the Wage Distribution.” Journal of Human Resources 39 (2): 425–50.
Neumark, D., and W. Wascher. 1992. “Employment Effects of Minimum and Sub-minimum Wages: Panel Data on State Minimum Wage Laws.” Industrial & Labor Relations Review 46 (1): 55–81.
Neumark, D., and W. Wascher. 2001. “Minimum Wages and Training Revisited.” Journal of Labor Economics 19 (3): 563–95.
Ngai, P., and J. Chan. 2012. “Global Capital, the State, and Chinese Workers: The Foxconn Experience.” Modern China 38 (4): 383–410.
Pollin, R. 2002. “What Is a Living Wage? Considerations from Santa Monica, CA.” Review of Radical Political Economics 34 (3): 267–73.
Pollin, R. 2007. “Economic Prospects: Making the Federal Minimum Wage a Living Wage.” New Labor Forum 16 (2): 103–107.
Prasch, R. E., and F. A. Sheth. 1999. “The Economics and Ethics of Minimum Wage Legislation.” Review of Social Economy 57 (4): 466–87.
Rebitzer, J. B., and L. J. Taylor. 1995. “The Consequences of Minimum Wage Laws: Some New Theoretical Ideas.” Journal of Public Economics 56 (2): 245–55.
Reich, M., D. M. Gordon, and R. C. Edwards. 1973. “A Theory of Labor Market Segmentation.” The American Economic Review 63 (2): 359–65.
Ricardo, D. 1891. Principles of Political Economy and Taxation . London: G. Bell and sons.
Sabia, J. J. 2008. “Minimum Wages and the Economic Well-Being of Single Mothers.” Journal of Policy Analysis and Management 27 (4): 848–66.
Shapiro, C., and J. E. Stiglitz. 1984. “Equilibrium Unemployment as a Worker Discipline Device.” The American Economic Review 74 (3): 433–44.
Slonimczyk, F., and P. Skott. 2012. “Employment and Distribution Effects of the Minimum Wage.” Journal of Economic Behavior & Organization 84 (1): 245–64.
Smith, A. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations . London: Strahan and Cadell.
Sobel, R. S. 1999. “Theory and Evidence on the Political Economy of the Minimum Wage.” Journal of Political Economy 107 (4): 761–85.
Stigler, G. J. 1946. “The Economics of Minimum Wage Legislation.” The American Economic Review 36 (3): 358–65.
Xie, F., and R. Chen. 2016. “Marx's Concept of Wage Minimum.” [In Chinese.] Teaching and Research 8 (2): 18–23.

Comments

Comment on this article

[1] Acemoglu, D., and J. S. Pischke. 2003. “Minimum Wages and On-the-Job Training.” in Worker Well-Being and Public Policy , edited by S. W. Polachek, 159–202. Bingley, West Yorkshire: Emerald Group.

[2] Allegretto, S. A., A. Dube, M. Reich, and B. Zipperer. 2013. “Credible Research Designs for Minimum Wage Studies.” ILR Review 70 (3): 559–92.

[3] Bechtold, B. H. 2014. “Neoclassical Economics and Federal Policies.” Review of Radical Political Economics 46 (4): 496–501.

[4] Bhaskar, V., and T. To. 1999. “Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition.” The Economic Journal 109 (455): 190–203.

[5] Bhatia, R., and M. Katz. 2001. “Estimation of Health Benefits from a Local Living Wage Ordinance.” American Journal of Public Health 91 (9): 1398–1402.

[6] Bink, B. 1962. “The Physical Working Capacity in Relation to Working Time and Age.” Ergonomics 5 (1): 25–28.

[7] Bowles, S. 1973. “Understanding Unequal Economic Opportunity.” The American Economic Review 63 (2): 346–56.

[8] Bowles, S. 1985. “The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models.” The American Economic Review 75 (1): 16–36.

[9] Burke, E. 1800. “Thoughts and Details on Scarcity.” Charity Organisation Review 9 (102): 273–88.

[10] Burkhauser, R. V., K. A. Couch, and D. C. Wittenburg. 1996. “Who Gets What from Minimum Wage Hikes: A Re-estimation of Card and Krueger's Distributional Analysis in Myth and Measurement: The New Economics of the Minimum Wage.” Industrial & Labor Relations Review 49 (3): 547–52.

[11] Card, D., and A. B. Krueger. 1995a. Myth and Measurement . Princeton, NJ: Princeton University Press.

[12] Card, D., and A. B. Krueger. 1995b. “Time-Series Minimum-Wage Studies: A Meta-analysis.” The American Economic Review 85 (2): 238–43.

[13] CBO (Congressional Budget Office). 2014. “The Effects of a Minimum-Wage Increase on Employment and Family Income.” Washington, DC: The Congressional Budget Office.

[14] Cheung, S. N. S. 2004. “Minimum Wage: The Bane of the Chinese Economy.” [In Chinese.] Southern Weekly , July 17.

[15] Clark, J. B. 1899. The Distribution of Wealth: A Theory of Wages, Interest and Profits . New York: Macmillan.

[16] David, H., D. Dorn, and G. H. Hanson. 2013. “The China Syndrome: Local Labor Market Effects of Import Competition in the United States.” The American Economic Review 103 (6): 2121–68.

[17] Doucouliagos, H., and T. D. Stanley. 2009. “Publication Selection Bias in Minimum-Wage Research? A Meta-regression Analysis.” British Journal of Industrial Relations 47 (2): 406–28.

[18] Drago, R. 1989–1990. “A Simple Keynesian Model of Efficiency Wages.” Journal of Post Keynesian Economics 12 (2): 171–82.

[19] Dube, A. 2013. “Minimum Wages and the Distribution of Family Incomes.” A Paper Series Commemorating the 75th Anniversary of the Fair Labor Standards Act.

[20] Dube, A. 2017. “Minimum Wages and the Distribution of Family Incomes.” IZA Discussion Paper, No. 10572. http://cdn.equitablegrowth.org/wp-content/uploads/2017/03/27134555/032817-WP-minimum-wages-and-family-incomes.pdf.

[21] Dube, A., T. W. Lester, and M. Reich. 2010. “Minimum Wage Effects across State Borders: Estimates Using Contiguous Counties.” The Review of Economics and Statistics 92 (4): 945–64.

[22] Dutt, A. K. 2003. “New Growth Theory, Effective Demand, and Post-Keynesian Dynamics.” in Old and New Growth Theories: An Assessment , edited by N. Salvadori, 124–57. Cheltenham: Edward Elgar.

[23] Even, W. E., and D. A. Macpherson. 2003. “The Wage and Employment Dynamics of Minimum Wage Workers.” Southern Economic Journal 69 (3): 676–90.

[24] Fang, C., and W. Dewen. 2003. “Migration as Marketization: What Can We Learn from China's 2000 Census Data?” China Review 3 (2): 73–93.

[25] Firpo, S., N. M. Fortin, and T. Lemieux. 2009. “Unconditional Quantile Regressions.” Econometrica 77 (3): 953–73.

[26] Fortin, N., T. Lemieux, and S. Firpo. 2011. “Decomposition Methods in Economics.” Handbook of Labor Economics 4: 1–102.

[27] Ghosheh, N. 2013. Working Conditions Laws Report 2012: A Global Review . Geneva: International Labor Office.

[28] Gregory, T. 2014. “When the Minimum Wage Bites Back: Quantile Treatment Effects of a Sectoral Minimum Wage in Germany.” ZEW-Centre for European Economic Research Discussion Paper, No. 14–133. http://www.sole-jole.org/15329.pdf.

[29] Groves, R. M. 2006. “Nonresponse Rates and Nonresponse Bias in Household Surveys.” Public Opinion Quarterly 70 (5): 646–75.

[30] Hashimoto, M. 1982. “Minimum Wage Effects on Training on the Job.” The American Economic Review 72 (5): 1070–87.

[31] Hirsch, B. T., B. E. Kaufman, and T. Zelenska. 2015. “Minimum Wage Channels of Adjustment.” Industrial Relations: A Journal of Economy and Society 54 (2): 199–239.

[32] Kahn, C., and D. Mookherjee. 1988. “A Competitive Efficiency Wage Model with Keynesian Features.” The Quarterly Journal of Economics 103 (4): 609–45.

[33] Koenker, R. 2005. Quantile Regression . Cambridge: Cambridge University Press.

[34] Koenker, R., and G. Bassett Jr. 1978. “Regression Quantiles.” Econometrica: Journal of the Econometric Society 46 (1): 33–50.

[35] Krugman, P. 2015. “Walmart's Visible Hand.” New York Times , March 2.

[36] Leonard, M. L., T. Stanley, and H. Doucouliagos. 2014. “Does the UK Minimum Wage Reduce Employment? A Meta-regression Analysis.” British Journal of Industrial Relations 52 (3): 499–520.

[37] Lester, R. A. 1946. “Shortcomings of Marginal Analysis for Wage-Employment Problems.” The American Economic Review 36 (1): 63–82.

[38] Levi, M., D. J. Olson, and E. Steinman. 2002. “Living-Wage Campaigns and Laws.” Working USA 6 (3): 111–32.

[39] Linneman, P. 1982. “The Economic Impacts of Minimum Wage Laws: A New Look at an Old Question.” Journal of Political Economy 90 (3): 443–69.

[40] Machado, J. A., and J. Mata. 2005. “Counterfactual Decomposition of Changes in Wage Distributions Using Quantile Regression.” Journal of Applied Econometrics 20 (4): 445–65.

[41] Malthus, T. 1798. An Essay on the Principle of Population . Electronic Scholarly Publishing Project.

[42] Marshall, A. 1890. Principles of Economics . 8th ed. London: Macmillan.

[43] Marx, K. 1976. Capital , vol. 1. London: Penguin Books.

[44] Marx, K., and F. Engels. 1976. Marx/Engels Collected Works , vol. 6. Moscow: Progress Publishers.

[45] Matthaei, J., and P. Zarembka. 2015. “Economists Hit Back in the Minimum-Wage Wars.” Letter to Editor, New York Times , March 15.

[46] Melly, B. 2005. “Decomposition of Differences in Distribution Using Quantile Regression.” Labour Economics 12 (4): 577–90.

[47] Mill, J. S. 1848. Principles of Political Economy with Some of Their Applications to Social Philosophy . London: John W. Parker.

[48] MWSC (Minimum Wage Study Commission). 1981. “The Minimum Wage: Its Relationship to Income and Poverty.” Washington, DC: U.S.G.P.O. The Congressional Budget Office. http://cbo.gov/sites/default/files/cbofiles/ftpdocs/61xx/doc6178/doc14a.pdf.

[49] Neumark, D., M. Schweitzer, and W. Wascher. 2004. “Minimum Wage Effects throughout the Wage Distribution.” Journal of Human Resources 39 (2): 425–50.

[50] Neumark, D., and W. Wascher. 1992. “Employment Effects of Minimum and Sub-minimum Wages: Panel Data on State Minimum Wage Laws.” Industrial & Labor Relations Review 46 (1): 55–81.

[51] Neumark, D., and W. Wascher. 2001. “Minimum Wages and Training Revisited.” Journal of Labor Economics 19 (3): 563–95.

[52] Ngai, P., and J. Chan. 2012. “Global Capital, the State, and Chinese Workers: The Foxconn Experience.” Modern China 38 (4): 383–410.

[53] Pollin, R. 2002. “What Is a Living Wage? Considerations from Santa Monica, CA.” Review of Radical Political Economics 34 (3): 267–73.

[54] Pollin, R. 2007. “Economic Prospects: Making the Federal Minimum Wage a Living Wage.” New Labor Forum 16 (2): 103–107.

[55] Prasch, R. E., and F. A. Sheth. 1999. “The Economics and Ethics of Minimum Wage Legislation.” Review of Social Economy 57 (4): 466–87.

[56] Rebitzer, J. B., and L. J. Taylor. 1995. “The Consequences of Minimum Wage Laws: Some New Theoretical Ideas.” Journal of Public Economics 56 (2): 245–55.

[57] Reich, M., D. M. Gordon, and R. C. Edwards. 1973. “A Theory of Labor Market Segmentation.” The American Economic Review 63 (2): 359–65.

[58] Ricardo, D. 1891. Principles of Political Economy and Taxation . London: G. Bell and sons.

[59] Sabia, J. J. 2008. “Minimum Wages and the Economic Well-Being of Single Mothers.” Journal of Policy Analysis and Management 27 (4): 848–66.

[60] Shapiro, C., and J. E. Stiglitz. 1984. “Equilibrium Unemployment as a Worker Discipline Device.” The American Economic Review 74 (3): 433–44.

[61] Slonimczyk, F., and P. Skott. 2012. “Employment and Distribution Effects of the Minimum Wage.” Journal of Economic Behavior & Organization 84 (1): 245–64.

[62] Smith, A. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations . London: Strahan and Cadell.

[63] Sobel, R. S. 1999. “Theory and Evidence on the Political Economy of the Minimum Wage.” Journal of Political Economy 107 (4): 761–85.

[64] Stigler, G. J. 1946. “The Economics of Minimum Wage Legislation.” The American Economic Review 36 (3): 358–65.

[65] Xie, F., and R. Chen. 2016. “Marx's Concept of Wage Minimum.” [In Chinese.] Teaching and Research 8 (2): 18–23.

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