An Empirical Analysis on the Employment Effects of Minimum Wage Hikes and Task Automation in Korea

Using Routine Task Intensity (RTI) and Routine Employment Share (RSH) suggested by Autor and Dorn (2013), this study empirically examines how the employment impacts of minimum wage increases respond to the susceptibility to technology substitution. Based on Local Area Labour Force Survey data from 2014 to 2018, we find that the employment effects of minimum wage hikes qualitatively differ across sub-labor markets. More specifically, while the reduction in employment is found to be concentrated on male workers at the extensive margin in the labor market for regular jobs, a higher minimum wage seems to cause an adjustment at the intensive margin in the non-regular labor market. The results imply that employment losses as a result of a higher minimum wage can be amplified in the labor market for regular jobs because of greater employment rigidity.