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Does the Minimum Wage Affect Non-wage Workers?

Author

Listed:
  • Hyunbae Chun

    (Sogang University)

  • Jungmin Lee

    (Seoul National University)

  • Donghan Shin

    (Korea Institute for Industrial Economics & Trade)

Abstract

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.

Suggested Citation

  • Hyunbae Chun & Jungmin Lee & Donghan Shin, 2024. "Does the Minimum Wage Affect Non-wage Workers?," Korean Economic Review, Korean Economic Association, vol. 40, pages 5-47.
    • Handle: RePEc:kea:keappr:ker-20240101-40-1-01
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Minimum Wage; Non-wage Workers; Self-employed; Job Flows; Small Businesses;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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