Macroeconomic impacts of increasing the minimum wage: The case of Korea
- 주제(키워드) Korea , Macroeconomic impacts , Minimum wage , Search and matching
- 등재 SSCI, SCOPUS
- 발행기관 Elsevier B.V.
- 발행년도 2022
- 총서유형 Journal
- URI http://www.dcollection.net/handler/ewha/000000190151
- 본문언어 영어
- Published As https://doi.org/10.1016/j.econmod.2022.105880
초록/요약
In the late 2010s, the Korean government substantially increased the minimum wage to help low-income workers and stimulate the economy. This study quantifies the long-run effect of increasing the minimum wage on major macroeconomic variables in Korea by using a large-firm search and matching model. Results indicate that increasing the minimum wage reduces employment, primarily among workers with low productivity. However, the average labor productivity for employed workers increases, thereby facilitating firms to increase capital investment. The latter effect is not substantially large to dominate the former effect. The results imply that increasing the real minimum wage by 15%, as in 2018, eventually reduces the total employment and gross output by 3.5% and 1.0%, respectively. © 2022 Elsevier B.V.
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