This paper aims to provide reliable estimates for labour supply elasticities in Korea. Following Bredemeier et al. (2019), we exploit information on a worker’s relative contribution to household earnings when estimating the Frisch labour supply elasticity to mitigate the downward bias in the presence of borrowing constraints. Using the Korean Labour and Income Panel Study data (2000–2018), we find that the labour supply elasticity in Korea is 0.23. In addition, elasticities are estimated to be 0.27 for men and 0.21 for women, confirming a greater bias for men than for women when the borrowing constraint is ignored.
Bibliographical noteFunding Information:
The authors thank the anonymous referee for helpful suggestions. Shim and Yang acknowledge the financial support from Yonsei University (Yonsei University Future-Leading Research Initiative (2020-22-0088 and 2019-22-0201, respectively)). Hye Rim Yi provided excellent research assistance.
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All Science Journal Classification (ASJC) codes
- Economics and Econometrics