Consumption Response to Minimum Wages: Evidence from Chinese Households - new publication by Harald Hau
A new paper by Professor Harald Hau evaluates the impact of the Chinese minimum wage policy on consumption of low-wage households for the period 2002-2009.
Using a representative household panel, Hau and his co-authors find that the consumption response to minimum wage income shock is increasing in the minimum wage share of household income and that poorer households fully consume their additional income. The large marginal propensity to consume is driven by households with at least one child, while childless poor households save two thirds of a minimum wage hike. The expenditure increase is concentrated in health care and education with potentially long-lasting benefits to household welfare.
The paper is co-authored with Ernest Dautović and Yi Huang, and is forthcoming in the Review of Economics and Statistics.
Prof. Hau is the Director of the GEMFIN (Master of Advanced Studies in Finance) program.
Dec 11, 2023