Is Minimum Wage A Effective Way To Narrow The Disparity Of Urban-rural Income

According to the latest statistics, China’s current urban-rural income ratio hasup to3.33, which reflects the income gap between urban and rural areas is very large.This pose a serious challenge to our social justice, which leading to an increaseconflicts, undermine social harmony, and will affect the future health growth of theeconomy. Therefore, explore methods to narrow the income gap is very useful andnecessary. At present, there is a point of view that the minimum wage whichpromulgated in1993is a effective way to narrow the income gap between urban andrural areas, but Is the minimum wage really a useful approach to narrow theurban-rural income gap? This is the core issue to deal in this paper.First, this paper use Jiangsu Province survey data find that, employees whoseWages below the minimum wage are mainly agricultural household population,correspond to the urban residents, these people have low level of education, workmainly in private enterprises and individual businesses and manufacturing,construction and other labor-intensive industries. As we know, the employment levelof labor-intensive industry is very sensitive to labor costs, logically speaking, theminimum wage increase will result in unemployed and reduce employmentopportunities for migrant workers,this will make them return to rural areas, as aresualt expand the urban-rural income gap.Then I collect the panel data of JiangsuProvince,2000-2009, including51counties and county-level city, choose Theurban-rural income ratio as the dependent variable, the minimum wage,economicdevelopment, urbanization, urban-rural dual structure, the proportionnon-agricultural employment of agricultural population, the level of financialdevelopment as explanatory variables, establish an empirical model found that theminimum wage increase does expand the urban-rural income gap.Therefore, the paper argues that the implementation of the minimum wagesystem can not be narrow the income gap between urban and rural residents.Tonarrow the urban-rural income gaps, the government should offer equal educationalopportunity and same social welfare to the rural wokers,and offer public financialsupport to minimum wage system.