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Behind the Elusive Employment Effect of the Minimum Wage : A Regression Discontinuity Approach

Author

Listed:
  • OH, Taehee
  • LEE, Jangyoun

Abstract

In Korea, workers must receive a full dayʼs pay when they work over 15 hours a week. This study leverages this regulation to estimate the impact of minimum wage increases on labor market outcomes, exploiting a sharp discontinuity in the minimum wage rule at 15 hours worked (i.e., regression discontinuity designs) based on a longitudinal panel dataset. The estimation results reveal that, in response to the hourly wage jumping by 20 percent at the discontinuity, Korean employers seek to reduce their labor costs by cutting employeesʼ working hours to avoid paying statutory holiday pay instead of laying them off.

Suggested Citation

  • OH, Taehee & LEE, Jangyoun, 2025. "Behind the Elusive Employment Effect of the Minimum Wage : A Regression Discontinuity Approach," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 66(2), pages 132-160, December.
    • Handle: RePEc:hit:hitjec:v:66:y:2025:i:2:p:132-160
    DOI: 10.15057/hje.2025007
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    References listed on IDEAS

    as
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    5. Martha J. Bailey & John DiNardo & Bryan A. Stuart, 2021. "The Economic Impact of a High National Minimum Wage: Evidence from the 1966 Fair Labor Standards Act," Journal of Labor Economics, University of Chicago Press, vol. 39(S2), pages 329-367.
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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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