Minimum wage and green productivity in the textile industry: policy linkages and regional heterogeneity

Minimum wage and green productivity in the textile industry: policy linkages and regional heterogeneity Enhancing green total factor productivity (GTFP) is essential for achieving high-quality development in the textile industry, necessitating both theoretical insights and effective policy measures. The purpose of this study is to examine how minimum wage policies affect environmental and economic efficiency in China’s textile sector, providing empirical evidence to inform policy decisions that balance worker welfare with sustainable industrial development. This research examines the influence of the minimum wage on GTFP within the textile sector, utilising manually assembled minimum wage data along with panel data from 276 Chinese cities spanning the years 2004 to 2023. A fixed-effects model was employed to investigate the relationship between the minimum wage and GTFP. The results indicate that an increase in the minimum wage exerts a detrimental effect on GTFP in the textile industry. Further mechanism tests reveal that the minimum wage impacts GTFP growth in the textile sector through two primary channels: technological innovation and factor substitution. Heterogeneity analysis shows that the negative impact of the minimum wage on GTFP varies across different regions, city sizes, and administrative levels, with a more pronounced effect observed in the western regions, smaller cities, and cities with lower administrative status. These findings offer significant implications for improving GTFP in the textile industry and fostering high-quality economic development in China.