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Effect of Regulation on Labor Productivity: Empirical Analysis Using a Panel of Korean Industries (in Korean)

Author

Listed:
  • Dongyeol Lee

    (Micro & Institutional Economics Team, Economic Research Institute, The Bank of Korea)

  • Jong Han Lee

    (Korea Institute of Public Administration)

  • Jong Il Choe

    (Department of Economics, Chosun University)

Abstract

We measure a regulatory stringency index across Korean industries and analyze the effects of regulation on labor productivity through the test and estimation of panel cointegration. Panel cointegration test shows that there exists a statistically significant cointegration among labor productivity, per capita physical capital stock, per capita R&D capital stock, and regulatory stringency index. Furthermore, the estimation of panel cointegration vector shows that, when the regulatory stringency index is classified by the characteristics of regulation (i.e., economic, social, and administrative), the economic regulatory stringency has significantly negative impacts on labor productivity while the social regulatory stringency does not affect productivity significantly. The empirical evidence implies that alleviating economic regulation rather than social regulation is more likely to be effective in enhancing labor productivity in Korea.

Suggested Citation

  • Dongyeol Lee & Jong Han Lee & Jong Il Choe, 2015. "Effect of Regulation on Labor Productivity: Empirical Analysis Using a Panel of Korean Industries (in Korean)," Working Papers 2015-9, Economic Research Institute, Bank of Korea.
    • Handle: RePEc:bok:wpaper:1509
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    More about this item

    Keywords

    Regulatory stringency index; Labor productivity; Effect of regulation; Panel cointegration test; Panel cointegration vector;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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