Overcoming the Working Poverty Trap:Welfare Redistribution of Minimum Wage
In theory,the minimum wage system may guarantee the wage level of low-skilled workers.However,firms might respond by substantially raising the wages of high-skilled workers due to skill premiums,eventually causing the wage gap to widen and working poverty rates to increase rather than decrease.Based on a quasi-experiment on adjustments to China's minimum wage standard,using the fuzzy difference-in-differences(DID)method,this paper assesses the policy effects of minimum wage standard adjustments on working poverty.The results show that the incidence of working poverty increases significantly after the increase in minimum wage,with a pronounced impact on workers with rural hukou,intercity mobility and low skills.In addition,the adjustment of the minimum wage standard also has three welfare redistributive effects:employment formality,labor intensity and consumption levels.When the minimum wage standard exceeds 59.11％of the average wage level,workers can then overcome the working poverty trap.
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