The Impact of the Minimum Wage on Older Workers in South Korea

The purpose of this thesis is to explore the effects of the minimum wage on older workers in South Korea and seek a better understanding of the effects in the context of the minimum wage policy process. Using the KLIPS 2004-2013, this study examines the effects of the minimum wage on the distributions of wages and family earnings, employment, and exits from in-work poverty among older employees aged 55 or over. Two government periods with the highest rates of increase in the minimum wage and the lowest rates of increase were compared. The results show that the minimum wage during the period with the highest growth rates raised wages, marginally reducing the wage gap, but had insignificant effects on the distribution of family earnings and the odds of individuals’ exits from in-work poverty. For the period with the lowest growth rates, the minimum wage slightly improved the median of wages and of family earnings, marginally reducing the wage gap, but decreased the chance to exit from inwork poverty. An adverse employment effect was not found for both periods. This thesis proposed a political economy framework and analysed the Minimum Wage Council’s annual reports on the fixing process 2003-2012. The findings show that the effects for the period with the highest growth rates were associated with the role of the minimum wage preserving the monthly pay as a result of the reduction of working hours and the exemption of and the subminimum for surveillance or intermittent work. The effects for the period with the lowest growth rates were related to the minimum wage increases slightly higher than annual pay awards, its role of preserving monthly pay consequent upon the reduction of working hours, and the subminimum for surveillance or intermittent work