In Korea, workers must receive a full day's pay when they work over 15 hours a week. This study leverages this regulation to estimate the impact of minimum wage increases on labor market outcomes, exploiting a sharp discontinuity in the minimum wage rule at 15 hours worked (i.e., regression discontinuity designs) based on a longitudinal panel dataset. The estimation results reveal that, in response to the hourly wage jumping by 20 percent at the discontinuity, Korean employers seek to reduce their labor costs by cutting employees' working hours to avoid paying statutory holiday pay instead of laying them off.
Incorporating the excess burden of taxation into a mixed duopoly to evaluate privatization, we analyze Bertrand competition between the public and private firms producing goods of different qualities. We show that (i) when the only private (resp. public) firm offers high quality, privatization (resp. mixed duopoly) is desirable if the excess burden of taxation is sufficiently large, and vice versa. This implies that the government's role in implementing privatization goes in the opposite direction; (ii) if the excess burden of taxation is intermediate, privatization is preferable regardless of the public firm's quality.
This study investigates the indirect environmental impact of geopolitical risk through global value chain (GVC) participation. Using Structural Equation Modeling, it estimates how global geopolitical risk affects CO2 emissions via disruptions in GVCs across 52 countries from 2001 to 2020. Results show that geopolitical risk reduces GVC participation, which raises emissions in developed economies but lowers them in developing ones. The contrasting effects reflect differences in countries' positions within global value chains in terms of carbon-intensive activities and the stringency of environmental regulations across country groups. The findings highlight GVCs as a critical mediating channel linking geopolitical instability to environmental outcomes.
This study extends the Porter hypothesis by adopting a cross-border approach because, in a hyper-globalized economy, the impact of foreign policies might diffuse across borders through international trade. We examine the cross-border spillover effects of foreign environmental policies on innovation and economic growth of other countries. Using a countryyear panel dataset, our study empirically finds that environmental policy spillovers contribute to improving green innovations, total factor productivity, and gross domestic product growth of other countries, which implies the borderless effect of the Porter hypothesis.
We investigate the utilization of financial information by the central government and policymakers for budget cuts under unprecedented fiscal pressure caused by COVID-19 in South Korea. Previous research (Helden, 2016; Raudla and Savi, 2015) strongly suggests the possibility that, owing to several reasons including time pressure, constrained analytical capabilities, and the political nature of the budgetary process, financial information might not be used for budget reductions under unprecedented fiscal strain. However, we find that financial information, which is simple but provides useful information to identify the progress of government projects, is utilized for budget cuts even under such fiscal stress.
With a multilateral vertical contracting model of media markets, we examine upstream competition and contractual arrangements in content provision. We analyze the trade of content by the Nash bargaining solution and the downstream competition by the Hotelling location model. We characterize the equilibrium outcomes and the contractual arrangements for various vertical structures. We show that the possibility of exclusive contracts rises when the value of the premium content increases, the degree of horizontal differentiation in the downstream market decreases, the importance of advertising revenue decreases, and the relative bargaining power of upstream firm decreases.
This paper examines the spillovers of US credit supply to small open economies by focusing on three Asian economies, Korea, Singapore, and Taiwan, from 1999 to 2019. We employ a proxy vector autoregressive model (VAR) to identify credit supply shocks in the US and estimate dynamic responses in these Asian economies. Similar to Mian et al. (2017), we find that output in Asian economies increases in the short run but decreases in the long run in response to a positive credit supply shock. The estimated effects are comparable to the responses to domestic credit expansion.
This paper contributes to the discussion about job polarization, focusing on firms in the main economic European sectors from 2009 to 2016. We adjust the standard concept of job polarization based on polarization between occupations to polarization between firms. Using aggregated firm data from the Orbis database and employing regression analysis, it analyses more than 260,000 firms in the 11 main economic sectors and identifies polarization between firms in most sectors considering different-sized firms. Our results imply polarization tendencies between firms, mainly in goods sectors rather than in service sectors.
This study investigates how agricultural policy distortions cause countries to deviate from optimal production levels, thereby widening agricultural productivity gaps both within and between nations. Using the Leontief production function under a comparative framework, we varied misallocations and distinct agricultural productivity gaps across countries. Developing countries typically misallocate excessive labor to farmland, resulting in small-scale farming, whereas developed countries often allocate surplus capital to farmland, favoring large-scale operations. This divergence in resource allocation not only widens agricultural productivity gaps within nations but also amplifies them between developing and developed countries.
This study examines the influence of presentation order on evaluations using a unique dataset from university entrance interviews conducted by one of the major universities in South Korea. Our data has three main advantages over the previous literature: random assignment of interview order; better controlled situations for all interviewees; and large numbers of interviewers and interviewees. Most of the order effect parameters are statistically insignificant. More importantly, even the statistically significant ones are practically insignificant in influencing decision-making outcomes. We also found no practically significant path dependency.
Throughout the world, some countries consider immigration policies to address labor supply di ffi culties. Particularly because OECD countries typically have an aging society with fewer children, immigration policies are examined continually. Our paper sets a two-sector model, with a high -skill sector and a low-skill sector, for assessment of immigration policies of two types: immigration for the high -skill sector and immigration for the low-skill sector. Results obtained from our study show that immigration has a positive e ff ect on employment of the native people or a negative e ff ect depending on production technologies used in the economy.
This study explores the e ff ects of prenatal and postnatal exposure to environmental tobacco smoke (ETS) on cognitive and non -cognitive skills of children. We account for an extensive set of controls and evaluate the robustness of the estimation results to omitted variable bias using the coe ffi cient stability approach. Our results show that prenatal and postnatal exposure to ETS signi fi cantly increases the percentile scores of internalizing behavior problems (e.g., depression, anxiety), externalizing behavior problems (e.g., aggression, impulsivity), and attention de fi cit hyperactivity disorder (ADHD) at ages 5-7. The early exposure to ETS also decreases percentile scores in standardized cognitive skills tests and school grades.
We quantify the heterogeneous impact of food delivery platforms on sales amounts at the restaurant level, using novel credit card transaction data from 2020 that cover the entire universe of Korean restaurants during the COVID-19 pandemic. Our instrumental-variable regression demonstrates the use of platforms increases a restaurant's monthly sales revenue by approximately 1,545 USD. Furthermore, we demonstrate the impact is particularly large on small restaurants. The bottom-decile restaurants experience a 97.6% increase in total sales revenue from platforms. Our findings show that small firms-not just 'superstar' firms-can be the main beneficiaries of technological advancements, depending on industry characteristics.
We employ a maximum forecast error variance VAR identi fi cation strategy to examine the e ff ects of anticipated government spending expansions. In our post -1981 U.S. sample, an anticipated expansion in government spending is delayed and persistent. This expansion is associated with increases in consumption and investment, as well as in real wages and hours. It also has an accelerator e ff ect on private capital investment and a delayed stimulative e ff ect on private sector productivity. Moreover, the monetary and tax policies accompanying the anticipated government spending expansion align well with the Fed ' s dual mandate and with less progressive federal tax reforms, respectively.
This study investigates the gender differentials in wages and job satisfaction using the Graduates Occupational Mobility Survey in Korea. Wage regressions estimate the impact of horizontal mismatch on wage differentials and overall job satisfaction differentials between workers with matched jobs and non-matched jobs. To deal with unobservable heterogeneity, we utilize Heckman's two-step method. The findings imply that male workers have higher wages and job satisfaction than female workers for both horizontally matched and not-matched groups. Moreover, gender wage and job satisfaction differentials are consistently larger in matched job workers than in non-matched job workers in recent periods.
We propose a theoretical framework to empirically investigate the relationship between international trade costs and reshoring entry mode. In our model, there are two types of reshoring strategy: domestic backward vertical integration (DBVI) or domestic outsourcing (DO). The relative prevalence of DO depends negatively on international trade costs. Using fi rm level panel data of Korea, we fi nd supportive evidence of reshoring patterns. In the manufacturing sectors, the number of domestic a ffi liates increased as the FDI-trend declined. During the same period, we con fi rm a negative relationship between DO and the distance to the host country of FDI in those sectors.
This study investigates wage differentials and discrimination in a leading policy bank in Korea during Japanese rule, using the Blinder-Oaxaca decomposition method. The empirical results show that the degree of discrimination attenuated toward the end of colonial rule. Wage discrimination based on gender is first explored in our study and observed throughout the colonial period. Finally, based on quantile decompositions, we conclude that discrimination at the top part of the wage distribution (dominated by male workers) was reduced and discrimination at the bottom part of the wage distribution (where most women were employed) persisted during the colonial period.
This paper employs a Bayesian conditional autoregressive model to geographically analyze housing prices in Seoul, Korea from a demographic perspective. Spatial dependence patterns are detected between 424 administrative districts in Seoul, and the parameter estimation will be implemented via a Bayesian approach. We confirm that the proposed model with spatial heterogeneity presents superior performance than the other common spatial regression models. We also demonstrate that the proposed model offers the flexibility to resent various global spatial autocorrelation, and that the model adequately captures the model variables' effect on housing prices.
Using a structural model and the 2018 Korean economy data, we show that even the individuals with relatively low income do not always prefer greater tax progressivity due to reduced economic efficiency (i.e., decrease in aggregate output and consumption) it accompanies. Hence, the counterfactual analyses reveal that the most popularly supported tax and redistribution policy in this economy does not uphold the optimal degree of progressivity for social welfare maximization and sustains about 0.31 of after-tax Gini.
