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1. Regional Amenities, Services Offshoring, and Skilled Employment in the Republic of Korea

Author:
Ju Hyun Pyun
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study empirically examines the effect of services offshoring and regional amenities on the composition of skilled employment for services firms. Analysing Korean firm-level data spanning from 2006 to 2019, we find that services offshoring, characterised by the import of services intermediate inputs, correlates with an increase in the proportion of skilled workers within firms. Additionally, the effects of this shift are nuanced based on different skill levels: services offshoring leads to an increase in the share of permanent headquarters workers to total workers. However, it does not affect the share of high-end skilled workers, such as headquarters’ share of management and research and development (R&D) workers. Moreover, regional amenities promote the positive effect of services offshoring on permanent headquarters workers’ shares. Lastly, the positive effect of offshoring on demand for high-end skilled workers in headquarters is significantly greater for firms with higher R&D intensity.
Topic:
Employment, Human Capital, Services, Skilled Labor, Research and Development, and Offshoring
Political Geography:
Asia and South Korea

2. Industrial Policy, Rise of Skilled Labor, and Firm Growth in the Early Stage of Economic Development

Author:
Sunghun Cho and Jaehyung Kim
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This paper examines the role of education policy in raising specific human capital for industrialization during the period of economic miracle in Korea. As part of the Heavy and Chemical Industry (HCI) drive, the Korean gov-ernment built technical schools near industrial complexes, resulting in a prompt supply of skilled labor. With practical curricula and training, young and skilled workers were able to enter the new sector. We also document these two patterns by using the Technical School List and the Occupational Wage survey. This government-led education reform led to higher firm-level productivity and growth, which is one of the important aspects explaining the success of the industrial policy. Motivated by historical evidence, we combine the administrative Mining and Manufacturing survey with the Technical School List to study the effec-tiveness of industry-oriented education reform. We incorporate an education layer into the targeted industries under the HCI drive by exploiting the varia-tion in technical school openings at the county level. Our results show that plants in treated regions tend to employ and invest more than those in control regions, but value-added and labor productivity are negatively correlated with our interaction terms. This implies that firms in HCI sectors experienced disproportionate growth and should pay higher on-the-job costs for workers while education reform may reduce the overall cost of hiring industry-specific labor. In contrast, non-HCI sector firms ex-hibit a positive correlation with value added and labor productivity. These firms might benefit from the education reform that improved overall quality of skilled workers. Lastly, the effect of education reform was concentrated before the end of the HCI drive period and did not persist after 1980. In the era of emerging industrial policy, our paper presents a new mecha-nism that encourages more workers to enter a new sector targeted by gov-ernment-led plans. Our results serve as a starting point for re-evaluating con-temporary industrial policy and underscore the need to consider this addi-tional layer in future policy design.
Topic:
Industrial Policy, Economic Growth, Economic Development, and Skilled Labor
Political Geography:
Asia and South Korea

3. Does Change in Intellectual Property Rights Induce Demand for Skilled Workers? Evidence from India

Author:
Pavel Chakraborthy and Prachi Gupta
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Do incentives to innovate create demand for skilled workers more than proportionately? We study the question using the implementation of the Patent (Amendment) Act in India in 2002 to comply with the Trade-Related Intellectual Property Rights agreement. We find, first, stronger intellectual property protection has a sharper impact on demand for skilled workers for high patentable industries. Demand for skilled workers increased by 0.5%–2.9% for industries that are more patentable. The average compensation for skilled workers went up by 10% in high patentable industries but decreased for unskilled workers by about 2%. Second, the increase in wage inequality can partly be attributed to the increase in wages rather than incentives. Third, the increase in demand for skilled workers is due to both the increase in intensive margin (or price) and extensive margin (number). Fourth, the aggregate effect is completely driven by industries producing intermediate goods and big plants. Finally, the reforms led to a significant reallocation of resources between industries. The high patentable industries invested more in technology adoption, started to produce more product varieties at higher quality, and filed for more product patent claims. Broadly, we demonstrate that stronger intellectual property protection leads to higher wage inequality between industries.
Topic:
Science and Technology, Labor Issues, Intellectual Property/Copyright, and Skilled Labor
Political Geography:
India and Asia

4. The Role of Innovation in Skill Development: Evidence from Small and Medium-Sized Enterprises in Viet Nam

Author:
Duc Anh Dang and Vuong Ahn Dang
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Using the Small and Medium Enterprise Survey in Vietnam and three proxies of innovation, we study the impact of firm innovation on on-the-job training in the manufacturing sector from 2007 through 2015. To address potential measurement errors and omitted variable problems, we use the average level of innovation in the same sector in other districts as an instrument for firms’ innovations. We find that firms provide additional training for existing workers when introducing new technology, and high-value-added firms provide additional training for existing workers. Moreover, government assistance may not be the main reason that encourages firms to provide training. The results also show that firms hire more skilled workers when implementing innovations.
Topic:
Development, Training, Innovation, and Skilled Labor
Political Geography:
Asia and Vietnam

5. Towards Freer Movement of Skilled Labour in AEC 2015 and Beyond

Author:
Christopher Findlay
Publication Date:
05-2014
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Movements of skilled labour in ASEAN have been largely from the lower income labour surplus economies to the higher income labour deficit economies in response to employment and remuneration differentials. The AEC Blueprint includes the objective of free flow of skilled labour to facilitate flows in services and investment. However, free flow is obstructed by differences in qualifications, standards and language proficiency as well as by national legal provisions and policies despite MRAs on professional services and the Agreement on Movement of Natural Persons. To facilitate free flows, their net benefits have to be emphasised; MRAs and labour market access be implemented effectively; and regional differences among tertiary institutions in standards, capabilities and English language proficiency be narrowed through academic cooperation and exchanges, and joint establishment of regional centres of excellence.
Topic:
Labor Issues, Services, Industry, Labor Rights, and Skilled Labor
Political Geography:
Asia and Southeast Asia