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Estimating Labor Supply Elasticities in Korea: The Role of Limited Commitment Between Spouses

Year: 2025

Type: article

Abstract: This paper examines if (i) the estimated labor supply elasticity is biased due to changes in the bargaining positions within a household in Korea and (ii) the problem, if detected, can be mitigated by using the distribution of different consumption bundles as a proxy (Bredemeier, Christian, Jan Gravert, and Falko Juessen. 2023. “Accounting for Limited Commitment Between Spouses when Estimating Labor-Supply Elasticities.” Review of Economic Dynamics 51: 547–78). Using KLIPS data from 2008 to 2022, we estimate the Frisch elasticity for married male workers to be around 0.44 and the bias is corrected mostly by controlling for total consumption, not by the distribution of consumption bundles. Similarly, estimates for married female workers did not exhibit significant bias. We suggest possible explanations on why our finding is different from the previous finding using US data.

Source: The B E Journal of Economic Analysis & Policy

DOI: 10.1515/bejeap-2024-0254

Authors: Seoyoon Jeong, Won Hyeok Kim, Myungkyu Shim

Institutions: Yonsei University, National Assembly

Language: English

Topic: Gender, Labor, and Family Dynamics

Subfield: Gender Studies

Field: Social Sciences

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $2,712