Impact of minimum wage legislation on gender differentials in sticky wages: evidence from Korea

ABSTRACT

This study adds to a growing body of studies on gender inequality, centred on the role of the minimum wage. The unprecedented increases of the minimum wage in Korea during the 2010s allow us to directly observe the social and economic impacts of these changes. This study explores the minimum wage role in mitigating the gender gap in sticky wages where firm performance worsened. Using a sample of 7,514 firm-year observations between 2010 and 2020 in the Korean KOSPI and KOSDAQ markets, we find that men’s wage stickiness in times of poor performance was greater than that of women, and the minimum wage reduces the gap in sticky wages between genders, alleviating gender inequality problems in wage determination.

KEYWORDS:

• Gender wage gap
• wage stickiness
• minimum wage
• gender inequality

JEL CLASSIFICATION:

• J16
• J31
• J38
• J88

Acknowledgement

This work was developed with the correction of the models and errors based upon the author’s master thesis (Cho, 2019) and we thank the reviewers for the comments on an earlier version of our paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ The Kaitz index is an economic indicator that was devised by Hyman Kaitz in 1970; studies in macroeconomics and labour economics rely on this index extensively (Williams and Mills 2001; Askenazy 2003).

Additional information

Funding

This research was supported by the Chung-Ang University Graduate Research Scholarship in 2020.