The Korean Journal of Economic Studies
The Employment Effect of the Minimum Wage Hike in 2018 in South Korea
Dae-Il Kim (Seoul National University) and Jungmin Lee (Seoul National University)Year 2019Vol. 67No. 4
We estimate the employment impact of the minimum wage hike in SouthKorea in 2018. We construct the grouped data by birth year and sex using themonthly data from the Korean Current Population Survey and exploit theacross-group variation in the impact of the minimum wage increase in 2018based on each group’s hourly wage distribution in 2017—the proportion ofworkers whose wages are above the 2017 minimum wage but below the 2018minimum wage. We focus on the primary labor force, that is, workers agedbetween 25 and 65 as of 2017. Results show that a one percentage pointincrease of the proportion reduces the employment growth rate by 0.14 to 0.16percentage points. About 25% of the reduction in employment from 2017 to2018 can be attributed to the minimum wage hike.