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

    16 Citations (Scopus)

    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 languageEnglish
    Pages (from-to)94-126
    Number of pages33
    JournalJournal of Financial and Quantitative Analysis
    Volume57
    Issue number1
    Early online date18 Jan 2021
    DOIs
    Publication statusPublished - Feb 2022

    Scopus Subject Areas

    • Accounting
    • Finance
    • Economics and Econometrics

    Fingerprint

    Dive into the research topics of 'Minimum Wage and Corporate Investment: Evidence from Manufacturing Firms in China'. Together they form a unique fingerprint.

    Cite this