Minimum wage and income inequality among the migrant population in China

Have frequently adjusted minimum wages slowed the widening of income inequality in China? To answer this question, this study examines the impact of minimum wages on income inequality among the migrant population using data from the China Migrants Dynamics Survey (CMDS) for 2011-2018 and data on city-level minimum wages over the same period. The research findings indicate that the minimum wage significantly reduces income inequality within China's migrant population. Importantly, the conclusion remains robust after employing rigorous analytical methods, such as instrumental variable analysis, replacement of the explained variable, and provincial-level data regression analysis. Moreover, the mechanism analysis reveals that the minimum wage contributes to reducing income inequality within the migrant population by raising the income of low-income groups without causing unemployment. The extent of this impact is closely related to the implementation of regional minimum wage policies. Additionally, the heterogeneity results show that minimum wage has a more pronounced effect on reducing income inequality among formally employed individuals and those working in the state-owned sector than in the informal employment and non-state-owned sectors. Overall, these findings provide valuable insights for policymakers to further optimize the minimum wage system in China to promote common prosperity.