Minimum Wage and Corporate Investment: Evidence from Manufacturing Firms in China

Heng Griffin Geng; Yi Huang; Chen Lin; Sibo Liu

doi:10.1017/S0022109021000053

Minimum Wage and Corporate Investment: Evidence from Manufacturing Firms in China

Heng Griffin Geng, Yi Huang, Chen Lin^*, Sibo Liu

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

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Abstract

This article studies how minimum-wage policies affect capital investment using the industrial census of manufacturing firms in China, where minimum-wage policies vary across counties. Exploiting discontinuities in minimum-wage policy at county borders, we find that minimum wages increase capital investment. The investment response to minimum wages is stronger for firms that are labor intensive, that have more room for technological improvement, and that cannot sufficiently pass on labor costs to consumers. A natural experiment based on county jurisdictional changes further assures the causal relationship.

Original language	English
Pages (from-to)	94-126
Number of pages	33
Journal	Journal of Financial and Quantitative Analysis
Volume	57
Issue number	1
Early online date	18 Jan 2021
DOIs	https://doi.org/10.1017/S0022109021000053
Publication status	Published - Feb 2022

Scopus Subject Areas

Accounting
Finance
Economics and Econometrics

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1017/S0022109021000053

Cite this

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Minimum Wage and Corporate Investment: Evidence from Manufacturing Firms in China

Abstract

Scopus Subject Areas

UN SDGs

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