Nominal minimum wages have been adjusted for inflation and expressed in 2000 RMB Fig. 2 Minimum-to-average wage ratios in China, by region.
To assure that we are comparing minimum wage standards on a comparable basis, the minimum-to-average wage ratios in Table 2 have accounted for the fact that some provinces include social security payments and housing provident funds as part of the wage when calculating minimum wages.
Table 2 presents summary statistics for the two key variables, the minimum-to-average wage ratio and the employment-to-population ratio, from 2004 to 2009.
In particular, Fig. 2 shows the minimum-to-average wage ratio started to increase in 2004 for the three regions and the whole country, implying that the 2004 policy has induced an increase in the bite of the minimum wage.
We also compute the two key variables minimum wage-to-average wage ratio and employment-to-population ratio by gender, region, age cohort, and educational attainment for all provinces, 16 provinces in our sample, and 15 provinces not in our sample.
As to the minimum-to-average-wage ratios, unsurprisingly, we find that the housekeeping sector has the highest ratio (.509) among all industries, followed by the hotel and restaurant sector (.498) and wholesale and retail sales trade (.471).471
Table 2 also presents the minimum-to-average-wage ratio by industry.
Furthermore, the minimum-to-average-wage ratio of workers receiving less than the minimum wage is 2.52, suggesting that these disadvantaged workers earn a wage that is only approximately one-quarter of the official standard.
For workers with different levels of skills, the evidence demonstrates that as the skill level increases, the minimum-to-average-wage ratio decreases quickly dropping continuously from.389 for high school education or below to.183 for college or above education.
Indeed, we find that young Chinese workers aged 15 to 29 have the highest minimum-to-average-wage ratio (.392), at least 10 percentage points higher than those of other age cohorts.
E i,t is the log of employment variable (employment-to-population ratio) of the relevant group e.g., young adult workers employed in urban (county) units divided by the urban working age population (15 64) for county i in year t; MW i,t and MW i,t−1 are the log of minimum wage index variables (minimum-to-average-wage ratio) for county i in year t and year t-1, respectively.
