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The effects of inter-Korean integration type on economic performance : The role of wage policy

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Frame of Image stions. Senior Economist, Economic Research Institute, The Bank of Korea, Namdaemun-Ro, Jung-Gu, Seoul 100-794, Korea. E-mail: smmun@bok.or.kr. Tel.: +82-2-759-5480 Corresponding author, Assistant Professor, Department of Economics, Soongsil University, Seoul, 156-743, Korea. Email: harkyoo@ssu.ac.kr. Tel: +82-2-820-0552
Contents
Ⅰ. Introduction ................................................................................................ 1 Ⅱ. Previous Studies .......................................................................................... 3
1. Studies on Reunification of East-West Germany and South-North Korea ............ 3 2. Economic theories of integration of nations........................................................... 5 3. Implications of integration types and wage policies .............................................. 7
Ⅲ. Integration Types and Wage Policies ........................................................ 8
1. Options of integration type in Korean Unification ................................................. 8 2. Wage policy options accompanying different integration types .......................... 11
Ⅳ. Economic Model ....................................................................................... 14
1. Baseline Model..................................................................................................... 14 2. Adjustment of model for analysis of policy effectiveness ................................... 16
Ⅴ. Simulation .


Full Text
Title The effects of inter-Korean integration type on economic performance
Similar Titles
Sub Title

The role of wage policy

Material Type Reports
Author(English)

Mun, Sung Min; Yoo, Byoung Hark

Publisher

[Seoul]:The Bank of Korea

Date 2012-08
Pages 39
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Social Development < Employment
Holding The Bank of Korea; KDI School

Abstract

This paper analyses the effects of various possible types of inter-Korean integration on economic performance in the northern part of Korea after reunification, focusing on the role of wage policy. The wage policy of reunified Germany is generally said to have been one of the major reasons for the increase in unification costs there, because it led to East German worker wages in excess of their productivity level. To reduce the costs of unification, Korea therefore needs to apply wage policies different from reunified Germany’s and from South Korea’s, which requires a new type of integration. Against this backdrop, this paper classifies the integration types into three—a unitary state, a federation, and an SAR (Special Administrative Region)—and analyzes their relative economic effects under the assumption that each type is accompanied by different wage policies. (The rest omitted)