Minimum wage and self-employed business owners: Evidence from South Korea

Taehyun Ahn

Labour Economics, 2024, vol. 88, issue C

Abstract: This study examines the influences of minimum wage on self-employment exits, using recent changes in the minimum wage level in South Korea. Using the cross-industry variation on the impact of the minimum wage—the proportion of workers whose wages are below the minimum wage in the upcoming year—combined with individual longitudinal data, I estimate the model of self-employment exits. Overall, the estimates show that the minimum wage hike has no significant impact on self-employed workers. However, it increases the likelihood of the business closing for the self-employed who hire employees. The results imply that a ten percent increase in the minimum wage raises the exit probability by 2.6 percentage points, which is 30.9 % of the average exit rate for those with employees. Moreover, the exits are significantly associated with the transition to non-employment.

Keywords: Minimum wage; Self-employment; Business owners (search for similar items in EconPapers)
JEL-codes: J20 J38 L26 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:88:y:2024:i:c:s0927537124000344

DOI: 10.1016/j.labeco.2024.102539

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