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Regional total factor productivity and local employment growth: evidence from Korea

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  • Jihye Choi

    (Chonnam National University)

  • Iltae Kim

    (Chonnam National University)

Abstract

This paper examines the effect of regional total factor productivity (TFP) on local employment growth using regional panel data from 2000 to 2014 in Korea. The employment equation derived from the constant elasticity of substitution production function is a function of wage rate, capital stock, and regional TFP. The demand for labor accounts for dynamics since there is a cost to adjusting demand for labor in the long-run. This paper introduces a dynamic panel regression model that considers the effect of lagged employment. TFP is a more appropriate measure of technology than Research and Development (R&D) expenditure or the number of patent applications. This paper measures regional TFP using a growth accounting method as a proxy variable of technology. This paper shows that an increase in regional TFP has a positive effect on local employment growth that is greater in the long-run than in the short-run. This suggests that employment policy such as vocational training adapting to the technological progress for product and process innovations increases labor force productivity in the long-run.

Suggested Citation

  • Jihye Choi & Iltae Kim, 2017. "Regional total factor productivity and local employment growth: evidence from Korea," Asia-Pacific Journal of Regional Science, Springer, vol. 1(2), pages 511-518, October.
    • Handle: RePEc:spr:apjors:v:1:y:2017:i:2:d:10.1007_s41685-017-0053-1
    DOI: 10.1007/s41685-017-0053-1
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    References listed on IDEAS

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    Cited by:

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    2. Xu Dong & Kejia Guo & Guizhi Xue & Yali Yang & Weili Xie & Chenguang Liu, 2023. "Environmental Regulation, Resource Misallocation, and Total Factor Productivity: An Empirical Analysis Based on 284 Cities at the Prefecture-Level and Above in China," IJERPH, MDPI, vol. 20(1), pages 1-15, January.
    3. Pinkovetskaia Iuliia Ginzburg Maria, 2018. "Is Russia Rationally Developing its Small and Medium-Sized Enterprises? An Analysis of Regional Production Functions," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 21(2), pages 37-48, November.
    4. Xu Dong & Yali Yang & Qinqin Zhuang & Weili Xie & Xiaomeng Zhao, 2022. "Does Environmental Regulation Help Mitigate Factor Misallocation?—Theoretical Simulations Based on a Dynamic General Equilibrium Model and the Perspective of TFP," IJERPH, MDPI, vol. 19(6), pages 1-21, March.
    5. Moriki Hosoe, 2017. "Special issue on economic analysis of law, politics, and regions," Asia-Pacific Journal of Regional Science, Springer, vol. 1(2), pages 427-429, October.

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    More about this item

    Keywords

    Regional total factor productivity; Local employment growth; Dynamic panel regression model;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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