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Labor Productivity, Wage, Labor Share, and Household Income in Korea

Jungsoo Park ()
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Jungsoo Park: Department of Economics, Sogang University, Seoul

No 1901, Working Papers from Research Institute for Market Economy, Sogang University

Abstract: This study provides a comprehensive analysis on the comparison of labor productivity growth, wage growth, changes in labor share and in household income in Korea for the 2000-2017 period. The findings show that contrary to the concerns raised in the recent literature that wages are lagging behind growths in GDP per employment, actually wage growth and GDP per employment growth for the Korean economy were very similar for the corresponding period either in nominal terms or real terms using the same price index. Furthermore, the firm-level and establishment-level micro data show that wage growth is surpassing the productivity growth, especially in the manufacturing sector and for the small-and-medium-sized enterprises. Declining household income share is mainly due to expanding government sector and reduction in the self-employment shares. Lastly, there are many unresolved issues in calculating adjusted labor income share and room for improvement in long-term time series of labor income shares. These findings imply that recent government policies to promote rapid wage increases based on incorrect facts should be reconsidered.

JEL-codes: E24 E25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:sgo:wpaper:1901

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