Theoretical And Empirical Studies Of The Minimum Wage System And Labor Employment

When Western industrialized countries began to implement the policy of the minimum wage system100years ago, the foreign scholars have begun to discussion its effects on employment. Compared with Western countries, until1994"Labor Law" had passed in China, our country established minimum wage guarantee system as national laws. In March2004, the Ministry of Labor and Social Security promulgated and implemented "the minimum wage regulations". When Tibet issued the minimum wage standard in the same year, all of our provinces, autonomous regions and municipalities directly under the Central Government had established the minimum wage security system. Followed, China’s academic circles began to widely discussed the employment effects of this policy.There are two points of view of the minimum wage effects on employment: one view is that the minimum wage is the intervention of a free labor market, and higher wage will inevitably bring about a reduction in employment opportunities; another view is that there is no certain negative correlations between the minimum wage and employment, and the minimum wage can improve the welfare of workers.In this paper, we analysis the characteristics of China’s labor market, to sum up the problems in the minimum wage system, and on this basis, we explore the effect of the establishment of China’s minimum wage on employment both in the levels of theoretical and empirical. In theory, this article firstly issues the effect of minimum wage on personal labor supply of each worker and the labor demand decision-making of each enterprise. Then, we put the minimum wage system into the analysis of labor market supply and demand curve, discussing the effect of minimum wage one equilibrium wage and employment in perfectly competitive labor market and monopsony labor market. In empirical aspects of this article, we adopt the panel data method, use the weighted cross-sectional data of individual fixed effects regression model, regulating the data from1999to2009to discuss the effect of the minimum wage and its lag on labor market employment from three angles: the country as a whole, regions and sectors. We concluded that the minimum wage has a negative effect on employment in the whole range; in the three regions,the greatest impact is in the eastern region, and the effect of the pasted year is bigger than the minimum wage of the second year on employment; the conclusion in the discussion of different industries is that the minimum wage on the one hand promote labor transfer from agriculture to other industries, on the other hand lead to a reduction of labor demand of labor-intensive industries, and ultimately had a negative impact on employment.Finally, on the basis of the full-text’s research, we propose that in order to really play the role of the minimum wage, we should build a more reasonable minimum wage standard, strengthen the enforcement of the minimum wage system, and improve China’s social security system. Only on this way we can truly improve the welfare of workers, and promote China’s industrial structure adjustment and upgrading.