Minimum Wage, Comparative Advantage and Inter-industry Reallocation
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| Title | Minimum Wage, Comparative Advantage and Inter-industry Reallocation
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| Author | Zhao Zhongkuang, Yang Rudai and Song Min |
| Organization | Economics and Management School, Wuhan University; School of Economics, Peking University; School of Economics and Finance, University of Hong Kong |
| Email | deniszzk@163.com;rdyang@pku.edu.cn; fmsong@hku.hk |
| Key Words | Minimum Wage, Firm Export, Comparative Advantage, Reallocation Effect |
| Abstract | In this paper, we estimate the effect of minimum wage(MW) on firm-level exports and comparative advantage with IV estimation. Our findings imply that with a 10% increase of MW on city level, the probability and the volume of firm’s export will decrease by 0.211% and 1.28% respectively. The results are robust to alternative model specification and IV estimation. Further study suggest that such effects are only slightly stringent in labor intensive sectors(0.234%), and aggregated exports on city-sector are not significantly related with MW. These results can be consistently explained with inter-industry reallocation effect of MW: the exports of affected incumbents shrink significantly; affected firms have higher exit probability and lower entry probability. |
| Serial Number | WP1342 |
| Time | 2019-03-05 |
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