@article{32d9fdf478394151a3fcb1c3a9750055,
title = "Macroeconomic impacts of increasing the minimum wage: The case of Korea",
abstract = "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.",
keywords = "Korea, Macroeconomic impacts, Minimum wage, Search and matching",
author = "Seok, {Byoung Hoon} and You, {Hye Mi}",
note = "Funding Information: We thank Editor Angus C. Chu, the associate editor, and two anonymous referees for their invaluable comments and constructive suggestions. We are also grateful to seminar participants at Korea University and 2021 Winter Meeting of the Korea International Economic Association for their insightful comments. This work was supported by the research fund of Hanyang University ( HY-2017 ). Funding Information: We thank Editor Angus C. Chu, the associate editor, and two anonymous referees for their invaluable comments and constructive suggestions. We are also grateful to seminar participants at Korea University and 2021 Winter Meeting of the Korea International Economic Association for their insightful comments. This work was supported by the research fund of Hanyang University (HY-2017). Publisher Copyright: {\textcopyright} 2022 Elsevier B.V.",
year = "2022",
month = aug,
doi = "10.1016/j.econmod.2022.105880",
language = "English",
volume = "113",
journal = "Economic Modelling",
issn = "0264-9993",
publisher = "Elsevier",
}