Does the Minimum Wage Affect Non-wage Workers?

Hyunbae Chun, Jungmin Lee and Donghan Shin
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Hyunbae Chun: Sogang University
Jungmin Lee: Seoul National University
Donghan Shin: Korea Institute for Industrial Economics & Trade

Korean Economic Review, 2024, vol. 40, 5-47

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.

Keywords: Minimum Wage; Non-wage Workers; Self-employed; Job Flows; Small Businesses (search for similar items in EconPapers)
JEL-codes: J23 J38 L23 (search for similar items in EconPapers)
Date: 2024
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