TY - JOUR
T1 - Minimum Wage and Corporate Investment
T2 - Evidence from Manufacturing Firms in China
AU - Geng, Heng Griffin
AU - Huang, Yi
AU - Lin, Chen
AU - Liu, Sibo
N1 - Publisher Copyright:
© 2022 Cambridge University Press. All rights reserved.
PY - 2022/2
Y1 - 2022/2
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=85099724649&partnerID=8YFLogxK
U2 - 10.1017/S0022109021000053
DO - 10.1017/S0022109021000053
M3 - Journal article
AN - SCOPUS:85099724649
SN - 0022-1090
VL - 57
SP - 94
EP - 126
JO - Journal of Financial and Quantitative Analysis
JF - Journal of Financial and Quantitative Analysis
IS - 1
ER -
