Youngho Kang

Trade, labour market rigidity, and aggregate productivity in OECD countries

As the economy becomes more open to trade, aggregate productivity can increase by driving out the least productive firms (the selection effect). Since the selection effect reallocates resources toward the more productive firms, this process can be hindered by rigidity in domestic labour market institutions. Based on the selection effect by Melitz (2003), this article empirically examines how rigidity in labour market institutions affects the consequence of trade on aggregate productivity. Findings from panel dynamic ordinary least square (DOLS) estimators suggest that a high degree of labour market rigidity in an open economy reduces Total Factor Productivity (TFP). In particular, in the case of extremely high labour market rigidity but low foreign R&D capital stocks, openness to trade can cause a country to experience decreasing TFP.

To Whom does Outward FDI Give Jobs

In this paper, we examine the impact of outward foreign direct investment (OFDI) on the overall employment, using Korean industry-level data for the period 2007-2014. We further decompose the effects of OFDI into types of foreign investment and workers’ skill levels, separately for each employment status (permanent and temporary), so that we capture whether the MNEs initiating foreign investment prefer to employ temporary instead of permanent workers. Our main findings show that there is little evidence of the impact of OFDI on the overall industry employment of permanent workers, while OFDI is positively associated with the overall employment of temporary workers. Besides, OFDI leads to an increase in the number of jobs created for mediumskilled workers regardless of employment status, whereas there is a negative relationship between OFDI and the temporary employment of low-skilled workers. To be more specific, efficiency-seeking and export-platform-seeking types of OFDI is associated with an increase in the employment of mediumskilled workers.

Delegative democratic attitudes: Theory and evidence from the Asian barometer survey

This paper analyzes the factors influencing whether individuals have delegative democratic attitudes (i.e. supporting strong executive power with little oversight from the legislature). Roughly up to 50% of voters in East Asia have delegative democratic attitudes, which are known to undermine democratic governance in new democracies. Understanding delegative democratic attitudes is thus closely linked to the question of why delegative democracy persists. Our theoretical analysis suggests that delegative democratic attitudes are associated with low support for democracy, a perception of the strong influence of interest groups on policy, and trust in a national leader who can counter the power of interest groups. Using Asian Barometer Survey data from East Asian countries, 2001–2011, we confirm the hypotheses. Our findings imply that transforming a delegative democracy into a consolidated democracy requires promoting support for democracy and preventing interest group dominance over public policy.

Differences in business R&D intensity across OECD countries: the role of size-dependent regulation

ABSTRACT We analyse the impact of size-dependent regulation in the labour market on business R&D intensity for 20 OECD countries spanning the periods 2002–2011. Using a difference-in-differences approach, we find that stricter size-dependent regulation leads firms with more than 50 employees to significantly reduce their R&D intensity. This finding implies that size-dependent regulation induces a distortion in the reallocation of R&D-related resources.