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Minimum Wage and EITC: Correlation and Policy Implications
Minimum Wage and EITC: Correlation and Policy Implications
  • Table of Contents

    Chapter 1. Introduction

     

    Chapter 2. Minimum Wage and EITC: Correlation

     

    Chapter 3. Minimum Wage and EITC: Correlation and Policy Implications, Analysis with General Equilibrium Model 

     

    Chapter 4. Conclusion 

  • SUMMARY

    This study aims to analyze the correlation between minimum wage and the EITC and present policy implications. The two rounds of sharp increase in the minimum wage in Korea in 2018 and 2019, and the drastic expansion of the EITC with the intent of addressing the side effects of the minimum wage hike require analysis of the mutual interactions. If it is found that combining or interrelating the two programs are likely to produce positive effects, new policy combinations need to be considered.

     

    The challenge in this type of analysis is the lack of data on the programs’ effects. At this point in time it is impossible to empirically analyze the effects of the parallel scaling of the two programs. Still, the spike in minimum wage and expansion of the EITC are such major policy changes that warrant an assessment of the implications, whatever the approach.

     

    A relatively recent study, Newmark and Wascher (2011), analyzed the correlation. It argued that single women with children, because of their fixed cost associated with employment, will see improvement in their income if they are entitled to EITC and higher minimum wage at the same time. With the minimum wage serving as the backstop to the possible drop in their wage resulting from increased labor supply, they would replace unskilled workers in the teens. The study also demonstrates the hypothesis through an empirical analysis. (For the full text of the English summary, please download the “Download 2 English_Abstract”.) 

Jae-Ryang Nam's other publications : 2
{Research Series} posts
No Title Author Date Attach
2 Minimum Wage and EITC: Correlation and Policy Implications Jae-Ryang Nam, Young-Jun Jeon December 30, 2019 Minimum Wage and EITC: Correlation and Policy Implications
1 9th Wave (2006) Economic Activities of Korean Individuals & Households - Basic Analysis Report of the Korea Labor and Income Panel Study- Jae-ryang Nam, Jae-min Seong, Sang-ho Lee, Hyo-mi Choi, Seon-ok Shin June 13, 2008 9th Wave (2006) Economic Activities of Korean Individuals & Households  - Basic Analysis Report of the Korea Labor and Income Panel Study-
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