Research On The Impact Of Minimum Wage Increase On The Household Economic Vulnerability In Low-Income Groups From The Perspective Of Risk Management

In 2021,China’s anti-poverty campaign won a comprehensive victory and took a solid step on the road to common prosperity.The problem of absolute poverty has been solved historically,but relative poverty will still exist for a long time.The "14th Five-Year Plan" emphasizes the need to "establish a robust long-term mechanism for consolidating and expanding poverty alleviation achievements...,continue to increase the income of low-income groups ".The report of the "20th National Congress" pointed out that "promote common prosperity" and "increase the income of low-income groups".The impact of the epidemic has highlighted the problem of household economic vulnerability.It is urgent to establish a long-term mechanism,especially to help low-income groups cope with the risk impact.The minimum wage,as the "minimum living allowance for in-service personnel",is one of the most direct tools for poverty reduction.Therefore,the minimum wage policy plays an important role in helping low-income groups prevent risk shocks and reduce household economic vulnerability.Based on the panel tracking data of China Household Finance Survey(CHFS)in 2015,2017 and 2019,this paper uses the VEP method to measure household economic vulnerability,and uses the Probit model to empirically test the impact of the increase of the minimum wage standard on household economic vulnerability and its mechanism;Secondly,the average minimum wage standard of two prefecture level cities in the same province in 2015,2017 and2019,which are the closest to the average GDP per capita of a region,is selected as the instrumental variable of its minimum wage standard to alleviate the endogenous problem,and robustness test is carried out by replacing the explained variables,regression methods and research samples;This paper further uses the mechanism model to empirically analyze the five mechanism channels of income,health,commercial health insurance,emergency savings,and financial capital stock between the minimum wage standard and household economic vulnerability from the perspective of risk management,and conducts a heterogeneity analysis on urban and rural areas,market-oriented environment,social medical insurance,and education level according to sample grouping regression;Finally,targeted policy recommendations are proposed based on the research findings.Research has found that an increase in the minimum wage standard significantly reduces household economic vulnerability,meaning that for every 10% increase in the minimum wage standard,the probability of household economic vulnerability decreases by 2.81 percentage points;This paper further uses the instrumental variable method to alleviate endogeneity issues,and empirical tests such as replacing the dependent variable,replacing regression methods,and replacing research samples show that the hypothesis conclusions proposed in this paper are still robust.Mechanism testing indicates that this is because,firstly,from the perspective of income mechanism,an increase in the minimum wage standard will increase the total income level of low-income families,thereby reducing their economic vulnerability;Secondly,from the perspective of health mechanisms,an increase in the minimum wage standard can improve the health status of family members,alleviate health shocks,and thereby reduce the probability of low-income families falling into economic vulnerability in the future;From the perspective of commercial health insurance mechanisms,an increase in the minimum wage standard can help low-income groups purchase commercial health insurance,effectively responding to risk shocks,and thereby alleviating their household economic vulnerability;From the perspective of emergency savings mechanisms,an increase in the minimum wage standard is beneficial for low-income families to have sufficient emergency savings to withstand risk shocks,thereby effectively enhancing their risk management capabilities and reducing their probability of falling into economic vulnerability in the future;Finally,from the perspective of the stock of financial capital,the minimum wage can play a role in stabilizing and improving the stock of financial capital,promote the accumulation of family wealth,and thus reduce the household economic vulnerability.Heterogeneity analysis indicates that this impact is more significant for rural households,areas with high levels of marketization,high levels of rule of law,households with social medical insurance,and low-skilled workers.The research in this paper helps to comprehensively analyze the welfare effects of the minimum wage policy and expand policy choices to assist low-income groups in coping with risk shocks.