The Impact of Minimum Wage Introduction on Characteristics of New Establishments: Evidence from South Korea

Posted: 11 Jul 2019

See all articles by Jisun Baek

Jisun Baek

KDI School of Public Policy and Management

Changkeun Lee

Yonsei University

WooRam Park

Korea Development Institute (KDI)

Date Written: July 1, 2019

Abstract

This paper examines whether imposing minimum wage alters the characteristics of new businesses. Applying a difference-in-differences framework to repeated cross-sectional data of new plants, we explore the impact of minimum wage introduction on characteristics of new plants in South Korea. We first confirm that the minimum wage introduction induced new plants to have higher remuneration to workers. Due to the imposed minimum wage, the new plants tend to start with fewer employees and to equip their employees with more capital. Finally, we find that the minimum wage introduction led to higher labor productivity among entering plants.

Keywords: Minimum Wage Introduction; Employment; Capital Intensity; Labor Productivity; Entering Plants; Establishment-Level Data

JEL Classification: J24, J38, K31, L25, L60

Suggested Citation

Baek, Jisun and Lee, Changkeun and Park, WooRam, The Impact of Minimum Wage Introduction on Characteristics of New Establishments: Evidence from South Korea (July 1, 2019). KDI School of Pub Policy & Management Paper , Available at SSRN: https://ssrn.com/abstract=3418129

Jisun Baek (Contact Author)

KDI School of Public Policy and Management ( email )

263 Namsejong-ro
Sejong-si 30149
Korea, Republic of (South Korea)

Changkeun Lee

Yonsei University ( email )

Seoul
Korea, Republic of (South Korea)

WooRam Park

Korea Development Institute (KDI) ( email )

263 Namsejong-ro
Sejong
Korea, Republic of (South Korea)

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