The influence of minimum wage regulation on labor income share and overwork: evidence from China

Abstract Minimum Wage Regulation (MWR) can raise wage rate, but its relation with labor income share is in controversy. We explore the influence of raising wage rate on labor income share and overwork in China. Panel data regressions are taken mainly based on China’s Industrial Enterprise Database and the International Labor Organization Database. Our findings show that raising wage rate can increase labor income share without leading to overwork. Factors that may significantly increase overwork are a higher proportion of male workers, a larger income gap and a lower per-capita income. We point out that the neoclassical explanation for labor income share is not persuasive. We support policies of raising wage rate and believe MWR is an effective measure to increase labor income share