The Employment Effect And Income Distribution Effect From The Minimum Wage Standard

Since China adopted the reform and opening-up policy in late1978, Chongqingarea has made outstanding achievements in economy. The national economy ofChongqing has developed rapidly, especially since Chongqing became municipality.The GDP of Chongqing has increased to10011.13billion yuan in2011from1440.56billion yuan in1998, the annual growth rate is as high as14%. But we should seeclearly that there are some unstable factors in social economy development. Especiallyin employment and income distribution field, employment growth elasticity are stillfairly low and the income gap between urban and rural residents grew continuously,which will affect the correctness of decision-making, the development of the socialeconomy, the development of socialism and also the development of a harmonicsociety.Since1994china adopted the minimum wage standard, the employment effectand income distribution effect from the minimum wage standard have long been afocus for concern and reform of economists. This year, many provinces, autonomousregions and municipalities directly under the central government had officially raisedminimum-wage standards for their respective localities.The minimum wage once again became the focus of experts and scholars. Basedon the analysis of Chongqing’s minimum wage standard, employment and incomedistribution, Using the time series data from1997to2010of Chongqing, wetheoretically and empirically analyzes the employment effect and income distributioneffect from the minimum wage standard.First, this paper analyzes the effects of minimum wage standard on theemployment. According to two departments model and the Todaro model achievements,Using the time series data from1997to2010of Chongqing, we theoretically analyzesthe employment effect of the minimum wage standard.The result shows that the effectof minimum wage standard on employment is not significant.Then, this paper analyzes the effects of minimum wage standard on the income distribution. Based on a simple model, this paper theoretically analyzes the effect ofminimum wage standard on the distribution of income in a dual economic structure.Using the time series data from1997to2010of Chongqing, we empirically analyzesthe income distribution effect from the minimum wage standard.the result shows thatthe effect of minimum wage standard on employment is not significant. The rise ofChongqing’s minimum wage standard improve the income distribution situation iscontribute to reduce the income gap between urban and rural.At last, combining with the above research conclusion, this paper proposerelevant suggestions on setting the minimum wage standards in order to promote theeconomic moderate development with society coordinately.