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The impact of the minimum wage on the characteristics of new establishments: Evidence from South Korea

Jisun Baek, Changkeun Lee and WooRam Park

Labour Economics, 2021, vol. 72, issue C

Abstract: This paper examines how the minimum wage affects the characteristics of new establishments. We utilize the introduction of a minimum wage of South Korea in 1988 and exploit a data covering the universe of new plants subject to this law. From difference-in-differences analyses, we first confirm that the introduction of the minimum wage caused new plants to remit higher remuneration to workers. Due to the minimum wage, new plants tended to start with fewer employees and to equip their employees with more capital. Finally, we find that the minimum wage led to higher labor productivity among entering plants.

Keywords: Minimum wage introduction; Employment; Capital intensity; Labor productivity; Entering plants; Establishment-level data (search for similar items in EconPapers)
JEL-codes: J24 J38 L25 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.labeco.2021.102059

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