Minimum Wage, Capital Investment and Technological Change: Evidence from China
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Topic: |
Minimum Wage, Capital Investment and Technological Change: Evidence from China |
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Time&Date: |
13:00-14:15 pm, 2019/8/16 (Friday) |
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Venue: |
Room 619, Teaching A |
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Speaker: |
Prof. Yi Huang (The Graduate Institute, Geneva) |
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| Abstract: |
This paper studies how minimum wage (MW) policies affect capital investment and technological change using the industrial census of manufacturing firms in China, where MW policies vary across counties. Exploiting MW policy discontinuities at county borders, we show that following MW hikes, firms increase capital investment, machine import, and innovation output. The investment response to MW hikes is stronger for firms that are labor-intensive, that have more room for technological improvement, and that cannot sufficiently pass-through labor costs to consumers. A natural experiment based on county jurisdictional changes further assures the causal relationship. |
