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Minimum Wage Hike and Multinational Enterprises' Employment: Firm-Level Evidence from South Korea

Author

Listed:
  • Jung, Hoyong

    (Seoul National University, Seoul, Republic of Korea)

  • Park, Sunyoung

    (Dongguk University, Seoul, Republic of Korea)

Abstract

This study examines the impact of a consecutive double-digit hike in Korea's minimum wage from 2018 to 2019 after the impeachment of President Park Geun-hye as an exogenous shock on the employment of multinational enterprises (MNEs). Notably, this topic has received limited attention in extant literature. Using a firm-level dataset covering the period 2006-2020, we find that MNEs respond to increases in the minimum wage by reducing their total employment size, including both regular and temporary workers. Furthermore, the effects are heterogeneous and depend on the participation of international trade and strategic partnerships. Our findings indicate that the minimum wage policy can even lead to a decrease in high-quality jobs within high-productivity companies, underscoring the need to adjust the pace of such increases to mitigate their side effects on the labor market.

Suggested Citation

  • Jung, Hoyong & Park, Sunyoung, 2024. "Minimum Wage Hike and Multinational Enterprises' Employment: Firm-Level Evidence from South Korea," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 39(1), pages 42-54.
    • Handle: RePEc:ris:integr:0893
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    Keywords

    minimum; wage; employment; multinational; enterprises; South; Korea;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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