The Impact of Minimum Wage on Urban Residents' Employment

Minimum wage system is a government choice which intends to guarantee low income worker's income and protect their rights and interests.Its impact on employment has led to extensive controversy.Targeted at the urban informal employment, this paper collects panel data of 30 provinces from 2000 to 2010 and studies the impact of minimum wage system on urban employment in China with FGLS.The result of empirical studies shows that a 1% increase in the minimum wage led to a roughly 0.23% decrease in urban informal employment.And the sensitivity analysis and dynamic regression extended the range of elasticity to -0.1~-0.29.Thus, the government should properly consider the negative impact on employment while adjusting the minimum wage system.