more disaggregated level, we can identify the industries with 64 two-digit divisions based on the Korean Standard Industrial Classification.<sup>18</sup> In the manufacturing sector, our focus of interest, there are 24 two-digit industries.

To explore the effect of the abrupt minimum wage increase announcement in August 2017 following a series of events associated with the political scandal that started in late 2016, we restrict the sample to the years 2013 through 2019, a seven-year horizon that includes four pre-period years and three post-period years.<sup>19</sup> Our key conjecture is that, faced with the minimum wage hikes, Korean firms with foreign affiliates adjusted their workforces differently than firms with no foreign affiliates. We therefore divide Korean firms into two groups: (i) firms with at least one foreign affiliates in the period 2013–2016 (MNCs); and (ii) firms with no foreign affiliates (non-MNCs) during the same period. Note that a sizable portion of Korean firms operated in foreign countries in 2016, which provides a good setup for our empirical analysis.<sup>20</sup> Table 1 summarizes the distribution of included in our geographic foreign affiliates data set in 2016 by region and country of destination.<sup>21</sup> In Korean manufacturing, other Asian countries were the top destination with 3,237, or 78.9% of the 4,103 in total, followed by North America with 356 (8.68%) and Europe with 315 (7.68%). At the country level, China accounts for 1,851 subsidiaries (15.11%), followed by Vietnam with 488 (11.89%), and then the USA with 343 (8.36%). Korean MNCs’ global production sharing is most pronounced in emerging Asian countries such as China and Vietnam.<sup>22</sup> the division of Korean into two new Although firms groups may provide insights into the impacts of minimum wage increases, identifying the employment effects is not straightforward. There are observable (and unobservable) differences between MNCs and non-MNCs (see Table 2). MNCs tend to be larger than non-MNCs in many dimenrevision 10. Hence, we match the two different revisions based on revision 9 throughout the paper. 18If a firm produces multiple products across different industries, the survey identifies the industry of a firm as the one with the highest sales value. If a firm has multiple plants, the survey identifies the firm’s region based on its headquarters’ location.

19Note that the baseline year is set to 2016 as the sequence of events in 2017 was totally unexpected in the eyes of firms in 2016. Hence, four pre-event periods are 2013, 2014, 2015, and 2016; three post-event periods are 2017, 2018, and 2019.

> 20In our data set, there is a total of 12,151 firms, 2,786 of which had at least one foreign affiliate in 2016 (23% of the total). In the manufacturing sector, there are 5,916 firms, 1,939 of which had at least one foreign affiliate in 2016 (33% of the total).

> 21A summary of industry affiliations for Korean MNCs’ foreign affiliates is provided in Appendix Table A.1. Of the 24 manufacturing industries, "Motor Vehicles, Trailers and Semitrailers" accounts for 761 subsidiaries, or 18.55% of the 4,103 in total, followed by "Electronic Components and Computer" with 738 (17.99%) and "Other Machinery and Equipment" with 359 (8.75%).

22Ahn and Park (2021, 2022) document that Korean outward FDI in emerging Asian countries is mostly vertical, with cost saving as the main motive; FDI in advanced countries is mainly horizontal with market penetration as the goal.

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