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

Devashish Mitra () and Jeongeun Shin

International Review of Economics & Finance, 2012, vol. 23, issue C, 91-109

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.

Keywords: Trade liberalization; Imperfect competition; Factor demand elasticities; Labor market; Korea (search for similar items in EconPapers)
JEL-codes: F02 F12 F13 F15 F16 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:23:y:2012:i:c:p:91-109

DOI: 10.1016/j.iref.2011.10.008

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