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The effect of minimum wage increases on the labor productivity of star-rated hotels: evidence from China

Jun Zhang (School of Tourism and Urban-Rural Planning, Zhejiang Gongshang University, Hangzhou, China)
Ting Pan (School of Tourism and Urban-Rural Planning, Zhejiang Gongshang University, Hangzhou, China)

International Journal of Contemporary Hospitality Management

ISSN: 0959-6119

Article publication date: 17 September 2024

94

Abstract

Purpose

This study aims to explore the spatial impact of an increase in the minimum wage on the labor productivity of star-rated hotels in China.

Design/methodology/approach

The impact is analyzed by using the dynamic spatial Durbin model.

Findings

The authors find a U-shaped link between the increase in minimum wage and labor productivity of star-rated hotels. The long-term impact of a minimum wage increase has a greater influence on labor productivity than its short-term effects. While there is no notable spatial spillover impact observed in the sample of 31 provinces in China, the authors do identify a spatial spillover effect of the minimum wage rises on the labor productivity of star-rated hotels in the central area. Furthermore, they observe heterogeneity across China. The eastern and western regions exhibit a U-shaped relationship, whereas the central region exhibits an inverted U-shaped relationship.

Practical implications

The findings of this study allow government agencies to get a more comprehensive comprehension of the actual consequences of minimum wage hikes on the tourism and hospitality sector, thereby establishing a solid basis for them to develop appropriate policies. Moreover, it offers a variety of suggestions aimed at enhancing the quality and efficiency of hotel management.

Originality/value

Research on the effects of minimum wage standards is scant in the hospitality industry. Based on human capital investment theory, this study examines the effect of the minimum wage standard hikes on labor productivity of star-rated hotels from the spatial perspective, filling the existing research gap.

Keywords

Citation

Zhang, J. and Pan, T. (2024), "The effect of minimum wage increases on the labor productivity of star-rated hotels: evidence from China", International Journal of Contemporary Hospitality Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJCHM-11-2023-1681

Publisher

:

Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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