The Impact Of The Minimum Wage On The Income Gap Of Urban Residents

Since the reform and opening up,The economy of China has made brilliant achievements,and the living standard of the people also has achieved a great improvement,at the same time,the income gap of China has not been improved,but more and more serious,and The Chinese Gini coefficient is at a high level which is higher than the international warning line 0.4,which had persisted for a significant period.All of these has been a serious threat to the harmony and development of economy and society.One of the cause of the problem is that the current industrial structure of our country gathered a huge number underlying workers and our underlying labors' income at a lower level for long-term in China.Thus,the government of China took active measures to implement the minimum wage system in 1993,and promulgated the new minimum wage provision in 2004.Then,the implementation and adjustment of minimum wage really helps to narrow the income inequality?This paper uses the 2008 and 2014 Chinese Household Income Project(CHIP)dataset implemented by the institute of economics of the Chinese Academy of Social Sciences and the macro-data form “China City Statistical Yearbook”.Choosing the Income gap of urban residents as the dependent variable which was measured with Gini coefficient and wage inequality,the minimum wage,per capita GDP,average wages of urban residents,the proportion of tertiary industry output value of GDP,the share of private consumption in GDP,financial expenditure and actual utilization of FDI as explanatory variables,establishing an empirical model found and using least square method to analyze the impact of the minimum wage on the income gap of urban residents in China.Then on the base of these,this paper studies the influence mechanism of minimum wage system on narrowing the income inequality.The results show that:(1)Improving the minimum wage will help narrow the income inequality of urban residents,At present,China's minimum wage is still at a low level,the increase of minimum wage can help to narrow the income gap of urban residents in China.(2)Measure the income gap of urban residents with the Gini coefficient,we can find that the role of the minimum wage to narrow the income gap is obvious when the data of floating population is taken into the analysis and the role of the minimum wage to narrow the income gap is limited when the floating population is rule out of the analysis.Compared with other measures,minimum wage is the best,the most effective and flexible policy which can narrow income gap of urban residents.(3)Measure the income gap of urban residents with wage inequality,we can find that the income gap between the income of the low income group and the middle income group when improving minimum wage reasonably.(4)The increasement the minimum wage,not only directly improve the income level of low-income groups,but also will promote the income of the middle income groups to improve at the same time,which has no impact on high-income groups.Based on the findings,this paper think that appropriate increase in the minimum wage does help to narrow the income gap between urban residents,and science adjustment mechanism of minimum wage should be established and take effective measures to ensure the implementation of the minimum wage system.