Impact of the minimum wage increase on smoking behaviour: A quasi-experimental study in South Korea

While there's a growing body of research studying the health effects of minimum wage increases, evidence of its impact on smoking is inconsistent. Using nationally representative statistics, our quasi-experimental study examines the impacts of South Korea's 2018 minimum wage increase on smoking patterns, offering a distinctive context due to the significant wage growth and the country's permissive smoking culture.

Using the Korean Welfare Panel Study (KOWEPS), we conducted a difference-in-differences analysis using two-way fixed effect (TWFE) and Callaway and Sant'Anna Difference-in-differences (CSDID) methods. The study sample (n = 3494) included individuals aged 19-64 at baseline in 2016, and employed in the entire study period (2016-2019).

The model results suggest a roughly 2% increase in the probability of current smoking with an insignificant impact on average daily cigarette consumption following the 2018 minimum wage increase in Korea. These effects were most pronounced among men and age groups (45-64). We also found policy effects on those earning up to 150% of the minimum wage.

In a culture with widespread acceptance of smoking, an exogenous increase in disposable income due to elevated minimum wage might enhance vulnerability to societal pressure to smoke. Although TWFE and CSDID both suggest the same overall trend, the latter approach allows a more detailed examination by acknowledging heterogeneous treatment effects. These results could guide policymakers to contemplate the potential for increased smoking resulting from minimum wage hikes in societies where tobacco use is common, and accordingly strategize anti-smoking public health initiatives.