Productivity Heterogeneity, Minimum Wage and Firms’ Exports in China
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| Title | Productivity Heterogeneity, Minimum Wage and Firms’ Exports in China
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| Author | Churen Sun Shuang Ma and Guoqiang Tian |
| Organization | Shanghai Institute of Foreign Trade;Southwest University of Finance and Economics;Shanghai University of Finance and Economics |
| Email | sunchuren@gmail.com;shuangma2@gmail.com |
| Key Words | Minimum wage; Heterogeneous firm; Productivity; Export |
| Abstract | It's of sense to understand the mechanism and the quantitative impacts of minimum wage on firms' exports for understanding the effects caused by the execution of the "New 'Labor Laws'" and for governments' policy making and adjustments. However, few theoretical and empirical researches have been done to it. This paper proposes a two-country trade unequilibrium model with heterogeneous firms and minimum wage to investigate the influences of minimum wage and productivity on firms’ exports. It shows that the influence of minimum wage on firms’ exporting probability and foreign sales is negative while that of firms' productivity on their exports is negative. Econometric analysis based on the survey data of Chinese Industrial Enterprises as well as the data of minimum wages collected ourselves within 1998 and 2007 verifies these predictions. Quantitatively, it shows that the elasticity of minimum wage on firms' exporting sales is -8.6% while that of firms' productivity is 75.6%, and it also shows that firms' exporting possibility decreases by 0.011 and increases by 0.016 when minimum wage and their productivity increases by 100%, respectively, holding the other variables constant. |
| Serial Number | WP164 |
| Time | 2012-02-14 |
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