HOW DO MINIMUM WAGE ADJUSTMENTS AFFECT WAGES IN CHINA: EVIDENCE BASED ON ADMINISTRATIVE PERSONAL INCOME TAX DATA.

By using unique administrative personal income tax data covering the population of a middle‐sized Chinese city from 2009 to 2013, we explore how minimum wage adjustments affect wages of low‐wage workers. The empirical evidence documented in this paper suggests a unique pattern of minimum wage regulation: while it permits wages to stay below the prevailing minimum wage threshold temporarily, it does encourage a higher growth rate for wages below the threshold. Overall, such a pattern might help lessen any downward pressures on employment, while ensuring that low‐wage earners gradually get better off over time. [ABSTRACT FROM AUTHOR]