Abstract
ABSTRACT The job stabilization fund in Korea was introduced to mitigate the negative impacts of a sharp increase in the minimum wage in 2018. This study estimates the employment effect of the fund by considering that only firms with fewer than 30 employees are eligible for the fund and using an empirical model that allows for interaction between exposure to the minimum wage (treatment intensity) and a policy dummy variable in a standard DID model. The estimation results show that the fund greatly alleviates the adverse effects of the minimum wage increase on employment: firms not receiving the fund significantly decrease employment for all cases, while those receiving it either slightly decrease or even increase employment in response to the minimum wage hike in 2018.
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