Can an increase in the minimum wage standard force enterprises to innovate? Evidence from China.

This paper examines the impact of an increase in the minimum wage standard on enterprise innovation and its mechanism. Based on the matching data between China's A‐share listed enterprises and the city minimum wage standard from 2003 to 2018, we find that an increase in the minimum wage standard promotes enterprise innovation, and this impact is sustainable. Mechanism analysis shows that an increase in the minimum wage standard enlarges R&D investments and personnel to promote enterprise innovation. In addition, we find that an increase in the minimum wage standard has a stronger effect in promoting the innovation of large, labour‐intensive, high‐innovation or non‐state‐owned enterprises than the others. [ABSTRACT FROM AUTHOR]