Minimum Wages and Labor Shares: Evidence from China Employer–Employee Survey

While the labor income share has continued to decline globally, China has witnessed a notable rebound since 2010. This study investigates whether minimum-wage policy contributes to this reversal, using firm–worker matched data from the 2018 China Employer–Employee Survey. The analysis shows that minimum-wage increases raise the labor income share among firms below the productivity frontier, with effects confirmed by instrumental variable estimation. Heterogeneity analysis further indicates that the distributive impact is stronger in labor-intensive, low-automation, and large firms, as well as in high-skill industries and developed cities. These findings highlight the productivity-dependent nature of minimum-wage effects and provide new micro-level evidence for understanding China’s distinctive labor income dynamics.