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

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  • Mitra, Devashish
  • Shin, Jeongeun

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.

Suggested Citation

  • Mitra, Devashish & Shin, Jeongeun, 2012. "Import protection, exports and labor-demand elasticities: Evidence from Korea," International Review of Economics & Finance, Elsevier, vol. 23(C), pages 91-109.
    • Handle: RePEc:eee:reveco:v:23:y:2012:i:c:p:91-109
    DOI: 10.1016/j.iref.2011.10.008
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    References listed on IDEAS

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    Citations

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    Cited by:

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    More about this item

    Keywords

    Trade liberalization; Imperfect competition; Factor demand elasticities; Labor market; Korea;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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