Ye et al. IZA Journal of Labor & Development (2015) 4:16 DOI 10.1186/s40175-015-0038-2 ORIGINAL ARTICLE Open Access Compliance with legal minimum wages and overtime pay regulations in China Linxiang Ye1, TH Gindling2,3* and Shi Li2,4 * Correspondence:
[email protected] Abstract 2IZA, Bonn, Germany 3Department of Economics, UMBC, We use a matched firm-employee data set to examine the extent of compliance 1000 Hilltop Circle, Baltimore, MD, with minimum wage and overtime pay regulations in Chinese formal sector firms. USA We find evidence that there is broad compliance with legal minimum wages in Full list of author information is available at the end of the article China; fewer than 3.5% of full-time workers earn less than the legal monthly minimum wage. On the other hand, we find evidence that there is substantial non-compliance with overtime pay regulations; almost 29% of the employees who work overtime are not paid any additional wage for overtime hours, and 70% are paid less than the legally-required 1.5 times the regular wage. JEL codes: J3, J8, O17 Keywords: China; Labor protection regulations; Minimum wages; Overtime pay; Compliance 1 Introduction In recent years, as the Chinese economy has become more market and export ori- ented, Chinese central and regional governments have actively intervened in the labor market in attempts to ensure that low wage workers benefit from the resulting rapid economic growth. A key intervention in the labor market has been legal minimum wages. In this paper we study minimum wages and two related labor market interven- tions to protect the pay of low wage workers in China: additional pay for overtime hours and legally-mandated wage supplements for dangerous work, night work, pen- sions and other social protections.