Import protection, exports and labor-demand elasticities: Evidence from Korea

Devashish Mitra, Jeongeun Shin

Research output: Contribution to journalArticle

11 Scopus citations

Abstract

We empirically examine the impact of trade on labor demand elasticities using Korean firm-level data. In our analysis, in addition to looking at the impact of liberalizing import restrictions, we take into account the fact that greater trade integration also leads to better and greater export possibilities. While we find that Korea's own tariffs do not have any statistically significant effects on labor-demand elasticities at the firm level, we find some evidence for the impact of imports on labor-demand elasticities when we replace tariffs with import penetration ratios. We also find a fair amount of evidence that exports increase labor-demand elasticites (in absolute value). While we find fairly strong evidence that tariff reductions in China have led to an increase in Korean firm-level labor-demand elasticities, there is no conclusive evidence showing the effect of tariff reductions by Korea's other major trade partners, namely the EU, US and Japan.

Original languageEnglish (US)
Pages (from-to)91-109
Number of pages19
JournalInternational Review of Economics and Finance
Volume23
DOIs
StatePublished - Jun 1 2012

Keywords

  • Factor demand elasticities
  • Imperfect competition
  • Korea
  • Labor market
  • Trade liberalization

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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