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Productivity and employment in a developing country : Evidence from Republic of Korea

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  • Productivity and employment in a developing country
  • Asian Development Bank (ADB)
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Title Productivity and employment in a developing country
Similar Titles
Sub Title

Evidence from Republic of Korea

Material Type Reports
Publisher

Asian Development Bank (ADB)

Date 2008
Series Title; No Economics Working Papers
Language English
File Type Link
Subject Economy < Trade

Abstract

The paper empirically investigates the relationship between productivity and employment in Republic of Korea using structural vector autoregression (VAR) models. Productivity-enhancing technology shocks significantly increase hours worked, which lends support to the real business cycle theory. The results show that technology shocks can explain most elements of a business cycle both in the short and long run. On the other hand, demand shocks can only explain price fluctuations. The evidence thus suggests that Korean policymakers should give higher priority to supply-side policies that promote technological progress and innovation.