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KMID : 1124019980140010219
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Korean Social Security Studies
1998 Volume.14 No. 1 p.219 ~ p.240
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Laor Productivity , Wage and Labor Market Flexibility in Korea
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Abstract
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We study structural characteristics of the Korean labor market by estimating the wage adjustment equation, which corresponds to a generalized expectations-augmented Philips curve from the economic theoretic perspective and to a generalized error-correction model from the timeseries analytic perspective. The wage adjustment equation is built around key macroeconomic variables in the labor market such as the nominal wage, the consumer price index, the trend in labor productivity, the unemployment rate, the GDP deflator and unionization rate. The empirical results are based on annual data over the period 1970-1997.
Major findings include (i) the presence of nominal rigidity whose severity is comparable to many OECD countries, (ii) the presence of real rigidity whose severity is extreme compared to other OECD countries, (iii) elastic response of the wage rate with respect to terms-of-trade. and (iv) unambiguous upward pressure of rising unionization on the wage rate.
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