The Korean Journal of Economic Studies
The Effect of the Minimum Wage on Self-Employed: Focusing on the Minimum Wage Hike in 2018
JunSeok Yang (Daejeon Sejong Research Institute) and YoonSeop Jang (Korea Small Business Institute)Year 2019Vol. 67No. 4
AbstractRecent social debate over minimum wage in South Korea has focused on itsnegative effect on self-employed. However, academic papers on this issue ishardly found. This paper attempts to fill this gap between academia andsociety. This paper empirically investigates the effect of the sharp minimumwage increase in 2018 on the number of self-employed. South Korea hasadopted national uniform minimum wage and this limits the analytic method ofidentifying the real effects of minimum wage. To overcome this constraint, weanalyze the relationship between ratio of the employees affected by raisedminimum wage, which differs across industries. Our empirical results find nosignificant relationship between minimum wage increase and the number ofself-employed over 2018. However, further analysis based on quarterlydividend data shows that minimum wage increase in 2018 has negatively andsignificantly affected the number of self-employed with employees since thethird quarter of 2018. Yet, we find no evidence that this has led to decreasein overall employment.