ILPC 2027

This paper aims to add an institutional and organizational approach to the study of minimum wage and tries to find explanation on the wage distribution effect of minimum wage institution in China through firm perspective. Based on the institutional theory and organizational theory, this research focuses on the firm as the main actor shaping how the institutionalization of the minimum wage shapes the distribution of wages. The main theoretical assumption is that firms are the organizations who have to face with this institutional change of minimum wage and respond through their decisions on wages and employment. These reactions could directly change the wage distribution in the firm and then contribute to the result of wage inequality in the whole labor market. Therefore, this research looks at how this labor market institution influences the wage inequality through affecting the firm strategy of wage and employment. The firm strategies are seen as an intermediating factor in the relation between the minimum wage policies and wage inequality.

This paper will first analyze the evolution of minimum wage institution in China with its geographic characteristic and its policy targets. Then a literature review on the effect of minimum wage institution on wage inequality will be presented with an aim to figure out the distribution impact of minimum wage in China and the insufficient in current research study. Thirdly, in order to investigate how the institutional pressure of minimum wage in the labor market affects the labor market outcome of wage distribution and to explain such distribution effect of minimum wage institution, this research tries to build up an institutional approach through figuring out the strategic response of firms to the minimum wages and the factors influence their strategic responses. The features of enterprise are much more important than individual character in determining the impact of the minimum wage (Gindling, Linxiang Ye and Liang Xiong, 2015).It is the firm who has to give response to the minimum wage standard increasing by changing their wage and employment strategy. And these firm strategic responses directly result in the change of wage distribution inside the firm and then expanding to the wage distribution in the whole labor market. Based on Oliver (1991) Grimshaw and Carroll (2002) and Aier and Weiss (2012),it develops an institutional apperoach where companies could be evaluated in order to answer the question above. In the forth part, it will explain the qualitative research method and the case selection of company in selected cities in China. The last part of the paper will discuss the research results and give further discussion on the further research through the institutional approach