Effects of the Minimum Wage on Small Firms in China: Spillover Effects from Large Firms

This study investigates how minimum wage affects small firms through spillover effects from large firms. Using firm-level panel data from Anhui Province in China, we find that after a minimum wage increase, small firms will reduce workers’ wages and create jobs due to the inflow of displaced workers from large firms. This spillover effect is larger for micro firms and private firms, where minimum wage compliance tends to be lower. We also find that high-tech small firms are more affected than low-tech ones because of their greater demand for skilled labor. Our findings not only highlight the unintended consequences of minimum wage on small firms in China, but also help to explain the ambiguous employment effects of minimum wage on the covered sector in developing countries.

INSTRUMENTS OF INTERNATIONAL LAW THAT FORM MINIMUM WAGE STANDARD

The topic of the article is the analysis of the instruments of international law that determine the minimum wage standard. Author points out the conventions of the International Labour Organization Nos. 26, 99 and 131 that directly refer to minimum wage. In author’s opinion, international standard of minimum wage is also indirectly formed by other instruments of the International Labour Organization that concern broadly understood workers’ rights. In this context the legal instruments on collective bargainings, prohibition of discrimination in employment, tripartite consultations, labour inspection and wage protection should be indicated. Author is of the opinion that provisions of international law, taken together, require Member States to undertake comprehensive actions aimed at safeguarding minimum wage in practice

Reforming wage policy for workers towards living wage in Vietnam

Currently, in Vietnam, wage policy is implemented through an important tool, the minimum wage. However, the reality shows that the use of the minimum wage to pay employees is still inadequate and far from reality. Instead of using the minimum wage, a number of developed countries have recently used a new concept in wage policy making, which is “living wage” with high efficiency. In line with the trend of international integration, a living wage needs to be recognized and researched and applied in practice in Vietnam to bring about more positive effects, ensuring the life of workers and the whole country the sustainable development of the business. The article uses information and secondary data to analyze the current situation of minimum wages, scientific basis for living wages and policy implications to aim at workers with a living wage in the future.

Labor Markets

What is the labor market? Like the goods and services markets, a labor market consists of the supply and demand sides. In the labor market, while workers supply labor, firms demand labor. This chapter studies the backward-bending nature of the labor supply curve and the downward-sloping nature of the labor demand curve. We also analyze the labor market equilibrium in a perfectly competitive labor market. Several policies such as immigration and minimum wage will be introduced to illustrate how government policies affect the labor market equilibrium.