Empirical Research On Chinese Minimum Wage Standard

With the rapid growth of economy, the income gap becomes bigger and bigger, which threatens the prosperity of the society. In order to protect the laborers’right and maintain the fairness of society, minimum wage system has been put into practice.Many scholars research into the economy effect of income allocation, employment and human resources from minimum wage system. However, the research for the decision process of minimum wage system is scare. This essay, which is based on the data of 254 cities from year 2005 to year 2011, applies fix effect model, stepwise regression, etc. to do empirical analysis for the factors of minimum wage system and deep explain the results with the summary of the current situation.Result:overall, the minimum wage is increasing around the country and the gap between different areas is becoming bigger; the minimum wage in Easter China is higher than that of Middle and Western China and the minimum wage gap between cities in Middle and Western China is non-significant; the rate of minimum wage to average income or per capita GDP is shrinking; average growth rate per year of minimum wage is lower than that of average income or average GDP; the hourly wage calculated from minimum monthly wage is way below the one found in official document, the difference of the proportion of the two coefficients between different regions is not very big. All these results show that the minimum wage system is unreasonable. According to the further empirical analysis, the decision process of minimum wage system considering all sample includes average wages, per capita GDP, per capita consumption expenditure,consumer price index and unemployment rate; workers’average wage and per capita consumption expenditure and consumer price index have played more important roles in the decision process; the decision process of Eastern and Middle China in 2005 was more reasonable than that in 2011 and the decision process of western China in 2011 was more rational than that in 2005 (the decision process of western China throughout these observed years never considered the factor of unemployment rate). Therefore, in order to formulate more scientific minimum wage system and share the performance with all layers in the society, this article came up with the recommendations for the understanding of previous mistakes and scientific calculation method in the decision process.