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Productivity and Employment in a Developing Country: Some Evidence from Korea

  • Kim, Sangho
  • Lim, Hyunjoon
  • Park, Donghyun

Summary The vast majority of the sizable empirical literature which examines the relationship between productivity and employment examines data from developed countries. In this paper, we contribute to the limited empirical literature on the productivity-employment relationship in developing countries by applying structural vector autoregression (VAR) models on Korean data. We find that productivity-enhancing technology shocks reduce hours worked in the short run. Such evidence is qualitatively similar to findings from developed countries, and more consistent with sticky price models than the real business cycle theory. Although productivity-enhancing technology shocks are an important source of economic growth in Korea, they may have exerted a negative impact on employment.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 38 (2010)
Issue (Month): 4 (April)
Pages: 514-522

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Handle: RePEc:eee:wdevel:v:38:y:2010:i:4:p:514-522
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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  18. Neville Francis & Michael T. Owyang & Athena T. Theodorou, 2003. "The use of long-run restrictions for the identification of technology shocks," Working Papers 2003-010, Federal Reserve Bank of St. Louis.
  19. Holzl, Werner & Reinstaller, Andreas, 2007. "The impact of productivity and demand shocks on structural dynamics: Evidence from Austrian manufacturing," Structural Change and Economic Dynamics, Elsevier, vol. 18(2), pages 145-166, June.
  20. Francis, Neville & Ramey, Valerie A., 2005. "Is the technology-driven real business cycle hypothesis dead? Shocks and aggregate fluctuations revisited," Journal of Monetary Economics, Elsevier, vol. 52(8), pages 1379-1399, November.
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  23. N. Gregory Mankiw, 1989. "Real Business Cycles: A New Keynesian Perspective," NBER Working Papers 2882, National Bureau of Economic Research, Inc.
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