The Impacts Of Minimum Wage System On The Employment Of Migrant Workers

Since the implementation of minimum wage system, both domestic and overseas researchers have proposed many theories to analyze the employment effects of minimum wage system, such as the unemployment effects model and monopoly model, etc. They also have done a lot of empirical researches, but they have not reached convincing agreement on the employment effects. Having the migrant workers market of China as a background, we analyze the effects of minimum wage system on the employment from the theoretical and empirical perspectives.First, we describe and analyze the status of minimum wage system in China by analyzing recent data. Second, after studying the status of migrant workers and the labor market, we conclude that this market is not perfectly competitive and is easily affected by economic fluctuation. On this basis we build theoretical framework to analyze the effects, from which we make a comparative static analysis. The results show that the minimum wage within a reasonable range has a positive impact on employment of migrant workers, but economy fluctuation will change the effects. Third, using balanced panel data on 27 regions for the years 1995 to 2008, this paper empirically analyzes the employment effects of minimum wage system. Based on the varying coefficient model with fixed effects, we select Generalized least Square Method to estimate the coefficients. According to regression results, we conclude that employment effects of minimum wage vary from region to region. In addition, we use unbalanced panel data to formulate the fixed effect variable intercept model to analyze the employment effects by industry. Different from other empirical results, our results show that it has a negative effect in manufacturing industry, while positive effects in construction,wholesale and retail and catering industry.Finally, based status description, theoretical and empirical analysis, we offer proposals on setting the minimum wage reasonably and promoting the human capital of migrant workers.