The Effects of the Minimum Wage on Poverty in Korea

The effects of the minimum wage policy have been controversial in Korea with an increasing gap between the rich and the poor since the Asian financial crisis. Most studies in Korea have focused on the disemployment effects of higher minimum wages and the negative effects of the policy in Korea. This study looks at the possible effects of the minimum wage policy on reducing poverty rates, as measured by the number of people who fall under the defined poverty threshold. We utilize a binary probit model to analyze the Korean Labor and Income Panel Study data and find that a higher hourly minimum wage can reduce the probability of an individual falling under the poverty line.