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Minimum wage, social insurance mandate, and working hours

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  • Kim, Ji Hwan
  • Lee, Jungmin
  • Lee, Kyungho

Abstract

Raising the minimum wage may have unintended negative consequences for workers. In South Korea, employers are required to contribute towards their employees’ social insurance, with the amount proportional to earnings. However, workers employed for less than 60 h per month are exempt from this contribution requirement. Using administrative payroll records from 2011 to 2019, we find that raising the minimum wage results in a higher share of the exempt workers. Our results remain robust when focusing on unanticipated hikes in the minimum wage in 2018 and 2019.

Suggested Citation

  • Kim, Ji Hwan & Lee, Jungmin & Lee, Kyungho, 2023. "Minimum wage, social insurance mandate, and working hours," Journal of Public Economics, Elsevier, vol. 225(C).
    • Handle: RePEc:eee:pubeco:v:225:y:2023:i:c:s0047272723001330
    DOI: 10.1016/j.jpubeco.2023.104951
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    More about this item

    Keywords

    Social insurance mandate; Exempt workers; Minimum wage; Work hours; Short-time workers;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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