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The Micro-Level Anatomy of Korea’s Rising Labor Share

Author

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  • Jiyoon Oh

    (Myongji University)

Abstract

This paper investigates the unique upward trend in the corporate labor share in South Korea since the 2000s, contrasting to the global decline observed during the same period. Analyzing financial statements from externally audited Korean firms, the study reveals that the increase in labor share is pervasive across all sectors, driven primarily by within-firm effects rather than the between-firm effects observed in the decline in the U.S. Notably, large firms have experienced a significant rise in labor share, attributed to the relatively slower growth in value-added compared to wages. The study also identifies a decreasing trend in industry concentration in South Korea, diverging from the increasing concentration and markups seen in the United States. These findings challenge the prevailing narrative attributing declining labor shares to technological advancements and the emergence of superstar firms, instead highlighting distinctive dynamics within the Korean corporate sector.

Suggested Citation

  • Jiyoon Oh, 2025. "The Micro-Level Anatomy of Korea’s Rising Labor Share," Korean Economic Review, Korean Economic Association, vol. 41, pages 175-210.
    • Handle: RePEc:kea:keappr:ker-20250101-41-1-06
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    More about this item

    Keywords

    Labor Share; Industry Concentration; Dynamic Olley-Pakes Decomposition; Firm Level Data;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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