TWO ESSAYS ON THE CHINESE LABOR MARKET by Hao Liu A dissertation submitted to the Faculty of the University of Delaware in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Economics Summer 2018 © 2018 Hao Liu All Rights Reserved TWO ESSAYS ON THE CHINESE LABOR MARKET by Hao Liu Approved: __________________________________________________________ Michael A. Arnold, Ph.D. Chair of the Department of Economics Approved: __________________________________________________________ Bruce W. Weber, Ph.D. Dean of the Alfred Lerner College of Business and Economics Approved: __________________________________________________________ Ann L. Ardis, Ph.D. Senior Vice Provost for Graduate and Professional Education I certify that I have read this dissertation and that in my opinion it meets the academic and professional standard required by the University as a dissertation for the degree of Doctor of Philosophy. Signed: __________________________________________________________ Charles R. Link, Ph.D. Professor in charge of dissertation I certify that I have read this dissertation and that in my opinion it meets the academic and professional standard required by the University as a dissertation for the degree of Doctor of Philosophy. Signed: __________________________________________________________ Saul D. Hoffman, Ph.D. Member of dissertation committee I certify that I have read this dissertation and that in my opinion it meets the academic and professional standard required by the University as a dissertation for the degree of Doctor of Philosophy. Signed: __________________________________________________________ Evangelos M. Falaris, Ph.D. Member of dissertation committee I certify that I have read this dissertation and that in my opinion it meets the academic and professional standard required by the University as a dissertation for the degree of Doctor of Philosophy. Signed: __________________________________________________________ Simon Condliffe, Ph.D. Member of dissertation committee ACKNOWLEDGMENTS The completion of this dissertation could not have been possible without the expertise of my advisor Dr. Charles Link and co-advisor Dr. Paul Hoffman. I would also like to thanks Dr. Evangelos Falaris and Dr. Simon Condliffe for sitting in my committee and take time to read and revise my dissertation. I would particularly thanks to Deborah Sharpley, who gives me infinite help during my whole doctorate study in the Department of Economics. Last but not the least, I would like to thank my parents, my wife and my adorable twin boys. I love you forever. iv TABLE OF CONTENTS LIST OF TABLES ....................................................................................................... vii LIST OF FIGURES ........................................................................................................ x ABSTRACT .................................................................................................................. xi Chapter 1 MINIMUM WAGE AND EMPLOYMENT IN CHINA ................................... 1 1.1 Introduction ............................................................................................... 1 1.2 Background ................................................................................................ 5 1.2.1 Minimum Wage History in China ................................................. 5 1.2.2 Minimum Wage in China .............................................................. 9 1.3 Literature Review .................................................................................... 15 1.3.1 Empirical Studies in the U.S. ...................................................... 16 1.3.2 Empirical Studies in China .......................................................... 19 1.3.2.1 Macro-data Studies ....................................................... 20 1.3.2.2 Micro-data Studies ........................................................ 21 1.4 Methodology ............................................................................................ 24 1.4.1 Synthetic Control Method ........................................................... 31 1.5 Data and Descriptive Analysis ................................................................ 32 1.6 Empirical Results ..................................................................................... 38 1.6.1 DID and DIDID Analyses ........................................................... 39 1.6.1.1 Eastern Region .............................................................. 43 1.6.1.2 Central Region .............................................................. 45 1.6.1.3 Western Region ............................................................ 47 1.6.1.4 Increase in MW <15% .................................................. 50 1.6.1.5 Increase in MW 15-25% ............................................... 51 1.6.1.6 Increase in MW >25% .................................................. 52 v 1.6.2 Multivariate Analysis .................................................................. 54 1.6.3 Synthetic Control Method ........................................................... 62 1.7 Conclusion ............................................................................................... 67 2 EFFECT OF BODY WEIGHT ON WAGE IN CHINA .................................. 69 2.1 Introduction ............................................................................................. 69 2.2 Literature Review .................................................................................... 74 2.2.1 Economic and Social Changes in China ...................................... 74 2.2.2 Body Weight and Wages in China .............................................. 84 2.2.3 Research in the United States ...................................................... 91 2.3 Conceptual Issues .................................................................................... 95 2.4 Data, Variables and Methodology ........................................................... 98 2.4.1 Data .............................................................................................. 99 2.4.2 Dependent Variable ..................................................................... 99 2.4.3 Explanatory Variables ............................................................... 100 2.4.4 Methodology .............................................................................. 108 2.5 Empirical Results ................................................................................... 112 2.5.1 Summary Statistics .................................................................... 112 2.5.2 Empirical Results ....................................................................... 116 2.6 Conclusion ............................................................................................. 131 3 CONCLUDING SUMMARY ........................................................................ 134 REFERENCES ........................................................................................................... 136 Appendix A ADDITIONAL RESULTS FOR CHAPTER 1 .............................................. 143 B ADDITIONAL RESULTS FOR CHAPTER 2 .............................................. 150 vi LIST OF TABLES Table 1.1: Provincial Monthly Minimum Wages from 2011 to 2015 in China (RMB) ..................................................................................................... 14 Table 1.2: Chinese Provinces by Increase in Monthly Minimum Wage, 2011-2012 .. 26 Table 1.3: Ratio of Monthly Minimum Wage and Average Wage by Province, China, 2011-2012 .................................................................................... 28 Table 1.4: Sample Means, Individuals Age 16-59, by Minimum Wage Increase through 2011-2012 in China .................................................................... 34 Table 1.5: Wage Distribution for Selected Low-Wage Monthly Wage Workers, 2011 and 2012 in China ........................................................................... 36 Table 1.6: Effects of Minimum Wage Increases on Employment of at-risk Groups ... 40 Table 1.7: Effects of Minimum Wage Increases on Employment Rate of At-Risk Group by Region in China, 2011-2012 ................................................... 42 Table 1.8: Employment Effects of Minimum Wage Increases for At-Risk Group by Size of Minimum Wage Increase in China, 2011-2012 .......................... 49 Table 1.9: Regression Estimates of Teens Without College Education Group 2011- 2012 Between Group DID (standard errors in parentheses) ................... 56 Table 1.10: Regression Estimates of Teens Without College Education Group 2011-2012 Within Group DID (standard errors in parentheses) ............ 57 Table 1.11: Regression Estimates of Teens Without College Education Group 2011-2012 DIDID (standard errors in parentheses) ................................ 58 Table 1.12: Regression Estimates of Adults With no High School Education Group 2011-2012 Between Group DID (standard errors in parentheses) .......... 59 Table 1.13: Regression Estimates of Adults With no High School Education Group 2011-2012 Within Group DID (standard errors in parentheses) ............. 60 vii Table 1.14: Regression Estimates of Adults With no High School Education Group 2011-2012 DIDID (standard errors in parentheses) ................................ 61 Table 1.15: Predictor Results of Synthetic Control Method for Teens in China 2010-2013 ...............................................................................................