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자본과 노동 간 대체탄력성의 추정(Estimating the elasticity of substitution between labor and capital in Korea) : 노동소득분배에 대한 함의를 중심으로(Implications for labor share)

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Title 자본과 노동 간 대체탄력성의 추정(Estimating the elasticity of substitution between labor and capital in Korea)
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Sub Title

노동소득분배에 대한 함의를 중심으로(Implications for labor share)

Material Type Reports
Author(Korean)

정대희

Publisher

세종 : 한국개발연구원

Date 2015-12
Series Title; No 정책연구시리즈 / 2015-22
ISBN 979-11-5932-146-7 (93320)
Pages 66
Subject Country South Korea(Asia and Pacific)
Language Korean
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Holding 한국개발연구원; KDI국제정책대학원
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Abstract

This paper studies the trend of labor share in Korea and tries to explain the trend in relation with factor prices. In order to investigate the issue, I estimate the substitution elasticity between labor and capital of a CES production function, which is used to decompose the effect of factor prices on the movement of the labor share. I find that Korea’s labor share has been on a downward trend for the past 30 years. Also, the trend is mainly driven by common within-industry decreasing trends of labor shares in most sectors, not by industry composition effect. The estimation results show that the elasticity of substitution is statistically significantly below one, and are robust to the change of specification and data processing. This implies that the decline of labor share in Korea is not driven by the change of factor prices, but by the direction of technological change, e.g., capital biased technological progress; the labor-augmenting technology growth has increased the demand for capital, resulting in a lower labor share. Therefore, it is desirable to consider a new policy tool to direct the productivity gains from the technology growth toward labor income, however policies to affect wage itself is not seemed to be promising.