In Korea, workers must receive a full dayʼs pay when they work over 15 hours a week. This study leverages this regulation to estimate the impact of minimum wage increases on labor market outcomes, exploiting a sharp discontinuity in the minimum wage rule at 15 hours worked (i.e., regression discontinuity designs) based on a longitudinal panel dataset. The estimation results reveal that, in response to the hourly wage jumping by 20 percent at the discontinuity, Korean employers seek to reduce their labor costs by cutting employeesʼ working hours to avoid paying statutory holiday pay instead of laying them off.
OH et al. (Mon,) studied this question.