The Korean Economic Forum
The Link between Labor Productivity and Wages in Korea
Eulsik Gim (Gyeonggi Research Institute)Year 2020Vol. 13No. 2
Recently, there has been a debate in South Korea over the link between wage sand labor productivity. The most important thing in analysing this link is the rational measurement of variables. The conceptual issues being discussed are which workers, inflation-adjusted wages, the range of wages, the coverage of production, capital depreciation and the full-time equivalent employee. According to the results, Koreans’ compensation has grown along with productivity in the long run over the past 40 years, and is also strongly linked to productivity in the short term. However, this link has been some what weakened since 2000. According to elasticity estimates, a 1 percentage increase in labor productivity over the past four decades has led to a 0.95 percentage increase in compensation. However, around 2000, short-term elasticity decreased from 0.85 to 0.77.}