The Korean Economic Review
Does the Minimum Wage Affect Non-wage Workers?
Hyunbae Chun (Sogang University), Jungmin Lee (Seoul National University) and Donghan Shin (Korea Institute for Industrial Economics & Trade)Year 2024Vol. 40No. 1
Non-wage workers, although not directly subject to the minimum wage laws, can be affected by a minimum wage increase, because labor markets are not segmented between wage and non-wage workers. Using 10-year longitudinal data on the universe of establishments in South Korea, we find that an increase in the minimum wage negatively affects the job growth of non-wage workers and that the largest channel for the effect is job destruction through business closing. The effect is larger in sectors that mainly consist of small businesses and low-skilled workers.