Home >> Working Paper
Minimum Wage and OFDI of China
Read        DownLoad
TitleMinimum Wage and OFDI of China  
AuthorLi Lei, Yu Mingyan and Xian Guoming  
OrganizationInstitute of International Economics, Center for Transnationals' Studies, Nankai University; Tianjin Administrative College;; 
Key WordsMinimum Wage; Labor Cost; OFDI; Investment Motivation 
AbstractIn the background of Chinese rapid growing labor cost and OFDI, this paper theoretically and empirically examines the relationship between changes in the minimum wage and firms' OFDI behavior in China using detailed firm-level data of medium and large manufacturing enterprises between 1998 and 2013. Theoretical model was build to analyze the mechanism. Empirical results find that a 1% increase in the log value of the minimum wage is associated with a 14.462 percentage-points increase in the times of OFDI. We further observe a larger decline among firms with lower average wage. The minimum wage effect is more pronounced for firms which OFDI motive is R&D, and vertical production. Finally, the impact of the minimum wage on OFDI will change over time. In the several years after the implementation of the minimum wage law, the impact of minimum wage on OFDI is the greatest, and then gradually decrease. 
Serial NumberWP1245 
  • Institute of Economics, Chinese Academy of Social Sciences
  • Copyright Economic Research Journal
  • The uploaded articles by this website express the authors’ views, not necessarily the views of this website.
  • Perennial Legal Counsel: Lu Kang (Chong Guang Law Office)
  • ISSN 0577-9154 CN 11-1081/F Postal Distribution Code 2-25l (Domestic) M16 (Overseas)
  • ICP 10211437 (Beijng)
  • No.2,Yuetan Bei Xiaojie, Xicheng District, Beijing 100836, P. R. China
  • Phone/Fax: (+8610) 68034153