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 journalJournal articlepeer-review

31 Citations (Scopus)


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 languageEnglish
Pages (from-to)94-126
Number of pages33
JournalJournal of Financial and Quantitative Analysis
Issue number1
Early online date18 Jan 2021
Publication statusPublished - Feb 2022

Scopus Subject Areas

  • Accounting
  • Finance
  • Economics and Econometrics


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