Notifications
12
Dec
Theme: Who’s being Protected by the Lowest Salary? A View from Enterprises’ Price Markup
Speaker: Yang Rudai
Associate Professor at Department of Economics, Peking University
Time: December 13th (Wednesday) 10:00-11:30 am
Venue: 815 Meeting Room, West Chongde Wing, RUC
Abstract:
This seminar will try to analysis how will the increasing lowest salary impact enterprises’ price markup from the prospective of institutional barriers and nature barriers. Previous study finds out that: (1) In general, when the lowest salary has increased, companies with low efficiency would be eliminated, while the market power of incumbent firms will be strengthened and that will raise the price markup. (2) The existence of institutional barriers and nature barriers in the market will protect the interests of monopoly firms. Such protection would be strengthened when the lowest price increases: when the institutional barriers are higher, the market would not be active enough to enter the lifted threshold. This will help incumbent firms to increase the price markup of product. When the nature barriers are higher, namely the industrial fixed cost or the elasticity of substitution of product is far above average, incumbent firms could expand their monopoly power and raise price markup of product by taking their first advantage. The study shows that the adjustment of the lowest salary should be cautious when the market system is not complete enough to decrease institutional barriers or motivate market entry. Otherwise it will cause monopoly and do harm to social welfare. As for the nature monopoly industry, appropriate rules are also necessary.
About Speaker:
Yang Rudai, Associate Professor at Department of Economics and Ph.D. Supervisor, Peking University. Prof. Yang has been enrolled in National high level talents special support plan (Ten thousand plan) and Chang Jiang Scholars Program. His papers have been published in Economic Research Journal (Chinese), World Development, and Journal of Business Ethics.