Introduction & History
The Korean Economic Association was launched in Pusan on November, 30, 1952.
KOREAN JOURNAL OF ECONOMIC STUDIES
Presidential Address : Current Status and Challenges of Data-Based Research in Economics
Year 2024 / Vol 72 / No 1
Interest in evidence-based policies and efforts to use administrative data for this purpose are global trends, and research that links administrative data held by the government and uses it to identify causal relationships plays an important role in policy development and evaluation. In Korea, discussions on the use of administrative data for evidence-based policy research have been steadily conducted in the past, but the results are still very limited. This study aims to identify the potential for domestic research using administrative data and lay the groundwork for future cooperation between the government and academia. To achieve this objective, we collected bibliographic information and JEL classification codes for articles published in four leading journals in the field of economics and used them to examine trends in overseas research using administrative data. Furthermore, based on 12 research plans submitted by members of the Korean Economic Association, we introduced research that can be conducted using domestic administrative data and summarized the administrative data required for such research. This study will be useful for the government in prioritizing the targets of administrative data disclosure for evidence-based policies and in determining the priority of linkage between various administrative data. Additionally, if the demand for administrative data proposed in this study is reflected and accessibility is improved, it is expected that empirical research on policy agenda development and policy evaluation will rapidly expand in South Korea.
The Income Cliff Effect after Retirement in South Korea
Year 2024 / Vol 72 / No 1
This study utilized the Korean Longitudinal Study of Aging to capture the rapid decline in income at the end of working life (“Income Cliff Effect”) and identified the main causes behind it. The empirical analysis from the Heckman 2-stage fixed-effect models reveals that the labor income of older workers decreases by an average of 42% from the age of 58 to 68, and it is estimated that aging and the separation from career jobs explain 89% of this income decline. Furthermore, while a transition to bridge-job employment has a short-term negative impact on income, a transition from a career job not only leads to a larger decrease in income but also results in a prolonged negative income shock. In particular, this income cliff effect is mainly observed among the high-education and high-income groups. These findings suggest that in order to reduce the high elderly poverty rate in Korea, support should focus on qualitative rather than quantitative aspects of post-retirement jobs for ensuring the better use of experiences and expertise acquired during their working life.
Market Prices in North Korea: 2006~2022
Year 2024 / Vol 72 / No 1
This paper reanalyzes the cost of living in North Korea, which has been discussed mainly concerning rice prices, through the price index. The analysis results show that North Korea’s market price fluctuations are a monetary phenomenon caused by changes in liquidity in the long term, and in the short term they are affected by internal and external environmental changes, such as natural disasters, failure of currency reform, strengthened international sanctions against North Korea, and the COVID-19 pandemic. During the period from 2006 to 2012, the currency over issuance for the purpose of making up for the fiscal deficit acted as a dominant factor in the rise in prices. After 2013, prices fluctuated mainly due to the supply and demand situation in the real sector, while North Korean authorities restricted any increase in liquidity. Since 2016, international sanctions against North Korea have been strengthened, and imports from China have plummeted to an unprecedented level due to the 2020 COVID-19 pandemic. As a result, prices rose mainly for imported foodstuffs and medicines. On the other hand, since 2013, when prices began to stabilize, a phenomenon in which rice prices have moved in a different direction from prices has been observed. It means that the rice price trend since 2013 does not explain the change in prices.
KOREAN ECONOMIC REVIEW
Does the Minimum Wage Affect Non-wage Workers?
Year 2024 / Vol 40 / No 1
Non-wage workers, although not directly subject to the minimum wage laws, can be affected by a minimum wage increase, because labor markets are not segmented between wage and non-wage workers. Using 10-year longitudinal data on the universe of establishments in South Korea, we find that an increase in the minimum wage negatively affects the job growth of non-wage workers and that the largest channel for the effect is job destruction through business closing. The effect is larger in sectors that mainly consist of small businesses and low-skilled workers.
Year 2024 / Vol 40 / No 1
We examine the optimal liability rule in accidents involving fully autonomous vehicles. In cases where enforcing due activity is not feasible, it is socially optimal to apply the strict liability rule to the human operator determining the activity level and to apply the negligence rule to the manufacturer and the victim who select care levels under contributory or comparative negligence in the unilateral activity case. Under the joint and several liability rule, both the manufacturer and the victim exercise due care, contingent on regulating the manufacturer’s liability share sufficiently high, and the human operator assuming the remaining risks chooses the socially optimal activity level maximizing the social net benefit. Conversely, if due activity enforcement is possible, an alternative liability rule proves optimal. Under this rule, the human operator engages in efficient activity to comply with the activity standard, the manufacturer exercises efficient care to meet the care standard, and the victim assumes residual liability so as to be induced to take efficient care. Notably, this liability rule achieves the social optimum, even in bilateral activity cases where both the human operator and the victim engage in activity. Our results diverge from previous findings suggesting that achieving the social optimum involves using public sanctions, such as paying a fine to the state.
Year 2024 / Vol 40 / No 1
The Korean government temporarily lowered dividend tax rates for investors of firms that significantly increased dividend payments in 2015–2017. This study begins by examining whether qualifying firms on average increased dividends after controlling for other factors of dividends and how additional dividend payouts were financed. Unsurprisingly, we find that qualifying firms for the dividend tax cut increased dividends substantially without incurring a substitution effect between dividends and share repurchases. The main question of this study, which is the effect of the dividend tax cut on share prices, is investigated using the difference-in-differences analysis in the propensity score matched sample. We find that that the dividend tax cut increased the value of firms that took advantage of the tax cut by 22%, which is consistent with agency theory and the prevailing Korean discount in the financial market.
KOREAN ECONOMIC FORUM
Can the Serious Accidents Punishment Act Reduce Serious Accidents?
Year 2024 / Vol 16 / No 4
It has been argued that in order to reduce serious industrial accidents in the workplace, the responsibility and punishment of employers and management executives need to be strengthened. In accordance with this argument, the Serious Accidents Punishment Act has been enacted and implemented. Using a game-theoretic analysis, this paper shows that simply strengthening the responsibility of employers and management executives does not guarantee a reduction in accidents and that the control that employers and management executives have over workers should be considered to analyze the impact of the Act on the occurrence of accidents and social welfare.
Dissecting Interregional Job Mobility in Korea using Big Data from National Pension Service
Year 2024 / Vol 16 / No 4
We investigate the pattern of job mobility across regions using the big data of National Pension Service. Our results from Logit regressions indicate that the probability of interregional job mobility is significantly higher for the young-aged, male, high income earners or those who employed in large or aged establishments. Also, the probability is higher in service than manufacturing sector, and in regions other than Seoul. Our findings imply that interregional job mobility exacerbates population decrease and brain drain in local area. To alleviate the population imbalance across regions, more decent jobs should be provided in local area.
The Effects of Changes in the Local Economic and Housing Market on Small and Medium Enterprise Loans
Year 2024 / Vol 16 / No 4
This study dynamically examines the impact of macroeconomic and housing market changes on small and medium-sized enterprise (SME) loans in common (16 regions) or individual regions using the Bayesian Panel VARX model. According to the empirical analysis results, the average outcome for the 16 regions indicates that SME loans tend to increase when industrial production, consumer prices, housing prices, and mortgage loans for homes rise. However, when examining these trends in individual regions, it is challenging to observe consistent results across all areas. In other words, the possibility arises that in some regions, access to funding for SMEs through financial institutions may become difficult due to policies in industrial investment and housing market that do not consider regional characteristics. On the other hand, during the recent COVID-19 pandemic period, policy effects indirectly confirmed through SME loans show a clear response to the increase in market interest rates, but the response to cost increases due to rising prices appears somewhat weak from an economic perspective.