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Journal of Economic Integration 2024 March;39(1) :42-54.
DOI: https://doi.org/10.11130/jei.2024009
Minimum Wage Hike and Multinational Enterprises' Employment: Firm-Level Evidence from South Korea

Hoyong Jung 1 and Sunyoung Park 2

1Seoul National University, Seoul, Republic of Korea
2Dongguk University, Seoul, Republic of Korea
Corresponding Author: Hoyong Jung ,Email: ghdydwjd1@gmail.com
Copyright ©2024 Journal of Economic Integration
ABSTRACT
This study examines the impact of a consecutive double-digit hike in Korea's minimum wage from 2018 to 2019 after the impeachment of President Park Geun-hye as an exogenous shock on the employment of multinational enterprises (MNEs). Notably, this topic has received limited attention in extant literature. Using a firm-level dataset covering the period 2006-2020, we find that MNEs respond to increases in the minimum wage by reducing their total employment size, including both regular and temporary workers. Furthermore, the effects are heterogeneous and depend on the participation of international trade and strategic partnerships. Our findings indicate that the minimum wage policy can even lead to a decrease in high-quality jobs within high-productivity companies, underscoring the need to adjust the pace of such increases to mitigate their side effects on the labor market.

JEL Classification
F23: Multinational Firms; International Business
J23: Labor Demand
Keywords: minimum wage | employment | multinational enterprises | South Korea
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