Effects of Minimum Wage Increase on Employment in Small and Medium-sized Enterprises in Korea

Authors

Hyunah Kim, University of California, BerkeleyFollow

Abstract

In Korea, where SMEs dominantly provide most of the jobs in labor market, how SMEs respond to an increase in the minimum wage in terms of employment can be a critical factor of job provision in Korean labor market. This paper mainly examines the effect of the minimum wage increase on employment in SMEs in Korea by using a difference-in-differences methodology, and finds that raising the minimum wage has on average significantly reduced total employment in all sizes of SMEs relative to large enterprises. The finding in this paper suggests that raising the minimum wage rate may incur loss of jobs in Korean labor market.

Recommended Citation

Kim, Hyunah (2019) "Effects of Minimum Wage Increase on Employment in Small and Medium-sized Enterprises in Korea," Undergraduate Economic Review: Vol. 16: Iss. 1, Article 25.
Available at: https://digitalcommons.iwu.edu/uer/vol16/iss1/25