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Do unions inhibit labor flexibility? : Lessons from Korea

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Frame of Image t labor flexibility in the Korean manufacturing. Korea provides an ideal setting to study the effects of unions on labor flexibility with the abrupt incidence of unleashing active unionism in 1987. We provide evidence that the short-run employment adjustment (one to six months) and hours adjustment ( ne- month) of manufacturing regular workers decrease in the posto 1987 period compared to the pre-1987 period. However, negative union effects on employment adjustment are limited to male, productio n, and regular workers, and Korean employers respond through increased employment of daily workers (workers with employment contract shorter than one month) and aged workers (55 or older) and also through the higher flexibility of female workers. Furthermore, significant part of the decrease in employment flexibility (for instance, 35 percent of the decrease in 1 month output elasticity of employment) is attributed to the labor market changes toward tighter labor market with the reduced young workers that make separation more procyclical. Key Words: Labor Flexibility, Labor Adjustment, Labor Unions JEL Classification Number: J40, J50
Do Unions Inhibit Labor Flexibility? Lessons from Korea
1. Introduction Labor market flexibility has been one of the buzzwords concerning labor in the global economy. Many policy makers and researchers in South Korea have also been increasingly concerned over the detrimental effects of labor market rigidity. Economic crisis in 1997 made calls for labor ma


Full Text
Title Do unions inhibit labor flexibility?
Similar Titles
Sub Title

Lessons from Korea

Material Type Reports
Author(English)

Lee, Ju-Ho ; Moh, Young-Kyu; Kim, Dae-Il

Publisher

[Seoul]:KDI school of Public Policy and Management

Date 2001-04
Series Title; No Working paper series / 01-05
Pages 31
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Social Development < Employment
Holding KDI school of Public Policy and Management

Abstract

This paper examines whether and to what extent unions inhibit labor flexibility in the Korean manufacturing. Korea provides an ideal setting to study the effects of unions on labor flexibility with the abrupt incidence of unleashing active unionism in 1987. We provide evidence that the short-run employment adjustment (one to six months) and hours adjustment (one-month) of manufacturing regular workers decrease in the post-1987 period compared to the pre-1987 period. However, negative union effects on employment adjustment are limited to male, production, and regular workers, and Korean employers respond through increased employment of daily workers (workers with employment contract shorter than one month) and aged workers (55 or older) and also through the higher flexibility of female workers. Furthermore, significant part of the decrease in employment flexibility (for instance, 35 percent of the decrease in 1-month output elasticity of employment) is attributed to the labor market changes toward tighter labor market with the reduced young workers that make separation more procyclical.