• Economic Analysis
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• v.26 no.4
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• pp.39-64
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• 2020

Typical business cycle models have difficulties in explaining key macroeconomic labor market variables, such as employment and unemployment, as they usually consider labor hour choices only. In this paper, we introduce labor market search and matching frictions into a New Keynesian nominal rigidity model and estimate it by Bayesian methods to examine the dynamics of the key labor market variables and business cycles in Korea. The results show that unemployment rates are largely explained by technology shocks, which affect the labor demand side, as well as labor supply shocks. In addition, wage bargaining shocks originating from the bargaining process between firms and workers have non-negligible negative effects on output and employment growth, and careful measures need to be taken to limit their adverse effects.

• East Asian Economic Review
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• v.23 no.1
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• pp.27-53
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• 2019

I employ search-and-matching to a multi-country and multi-sector Ricardian model with input-output linkages, trade in intermediate goods, and sectoral heterogeneity, in order to quantify the welfare effects from tariff changes. The paper shows that labor market frictions can be a source of comparative advantage in the sense that better labor market conditions contribute to lower cost in production. Labor market frictions play a critical role in determining the probability of exporting goods to trading partners, and interact with bilateral trade share, price, expenditures, etc. Unemployment and changes in unemployment rates due to tariff reductions contribute welfare changes across countries, implying that welfare effects based on quantitative trade models with full-employment are likely to be biased. I confirm the biased welfare effects by revisiting Caliendo and Parro (2015), who conduct an analysis of the welfare effects from the NAFTA from 1993 to 2005. I show that the welfare gap between theirs and mine has a positive correlation with changes in observed unemployment rates across countries. With the constructed model, I further conduct counterfactual exercises by asking what would happen if China's tariffs remain unchanged from 2006 to 2015. It turns out that there are mild welfare effects to trading partners in the world trading system.

• Asia-Pacific Journal of Business
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• v.14 no.3
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• pp.17-24
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• 2023

Purpose - The objective of this research is to investigate how lowering labor market frictions for female workers affects corporate social responsibility (CSR). Design/methodology/approach - We utilize the staggered adoption of state-level Paid Family Leave (PFL) acts in the U.S. These acts provide significant flexibility for female employees by mandating paid leave for a family or medical events. Our study is based on a sample of 30,027 publicly traded firms in the U.S. from 1991 to 2012. We employ a difference-in-differences research design, considering treated firms as those headquartered in states that enacted PFL laws. Findings - We find that there is a significant increase in the firms' CSR performance following the adoption of the PFL, suggesting that lowering the labor market frictions for female workers encourages firms to invest in CSR initiatives. Research implications or Originality - This study informs policy makers that PFL enables firms to reduce costly employee turnover and results in an increase in CSR performance.

• Journal of Labour Economics
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• v.43 no.3
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• pp.63-100
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• 2020

This paper incorporates the Diamond-Mortensen-Pissarides search and matching framework into the DSGE model. We estimate the model using a Bayesian estimation methodology on Korean data (1991:1-2020:1). Using the estimated model, we investigate the quantitative effects of wage subsidies. Wage subsidies increase matched firms' profits by reducing labor costs which leads to increases in new matches, employment and output. We find that for one percent of GDP in wage subsidies, the cumulative increase in the output level will be greater than 1 percent.