Minimum Wage and OFDI of China
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| Title | Minimum Wage and OFDI of China
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| Author | Li Lei, Yu Mingyan and Xian Guoming |
| Organization | Institute of International Economics, Center for Transnationals' Studies, Nankai University; Tianjin Administrative College |
| Email | nklilei@nankai.edu.cn；yumy515@126.com；gmxian@nankai.edu.cn |
| Key Words | Minimum Wage; Labor Cost; OFDI; Investment Motivation |
| Abstract | In 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 Number | WP1245 |
| Time | 2017-12-12 |
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