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Estimating Labor Supply Elasticities in Korea: The Role of Limited Commitment Between Spouses

Author

Listed:
  • Jeong Seoyoon

    (School of Economics, Yonsei University, Seoul, South Korea)

  • Kim Won Hyeok

    (Macro-Economic Analysis Division, National Assembly Budget Office, Seoul, South Korea)

  • Shim Myungkyu

    (School of Economics, Yonsei University, Seoul, South Korea)

Abstract

This paper examines if (i) the estimated labor supply elasticity is biased due to changes in the bargaining positions within a household in Korea and (ii) the problem, if detected, can be mitigated by using the distribution of different consumption bundles as a proxy (Bredemeier, Christian, Jan Gravert, and Falko Juessen. 2023. “Accounting for Limited Commitment Between Spouses when Estimating Labor-Supply Elasticities.” Review of Economic Dynamics 51: 547–78). Using KLIPS data from 2008 to 2022, we estimate the Frisch elasticity for married male workers to be around 0.44 and the bias is corrected mostly by controlling for total consumption, not by the distribution of consumption bundles. Similarly, estimates for married female workers did not exhibit significant bias. We suggest possible explanations on why our finding is different from the previous finding using US data.

Suggested Citation

  • Jeong Seoyoon & Kim Won Hyeok & Shim Myungkyu, 2025. "Estimating Labor Supply Elasticities in Korea: The Role of Limited Commitment Between Spouses," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 25(2), pages 343-370.
    • Handle: RePEc:bpj:bejeap:v:25:y:2025:i:2:p:343-370:n:1008
    DOI: 10.1515/bejeap-2024-0254
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    More about this item

    Keywords

    Frisch labor supply elasticity; limited commitment; Korea; KLIPS;
    All these keywords.

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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