Labor market rigidity at home and multinational corporations' flexible production reallocation abroad

• 成果类型: Article
• 署名作者: Ahn, Jaebin; Choi, Jaerim; Chung, Sunghoon
• 署名单位: International Monetary Fund; Yonsei University; Korea Development Institute (KDI)
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2025.103502
• 发表日期: 2025
• 关键词: Labor market rigidity; Production reallocation; MNCs; Foreign affiliates; Employment adjustment

摘要

An unprecedented regime change following the 2017 presidential impeachment led to a dramatic shift to more rigid labor market policies in the Republic of Korea, represented by consecutive double-digit hikes in the minimum wage in the next two years. Using a firm-level data set with detailed information about foreign affiliates over the period of 2013 similar to 19, this paper assesses the employment consequences of stricter labor market regulations. The empirical evidence uncovers an underexplored mechanism through which domestic labor market rigidity can reduce domestic employment as multinational firms with flexible internal networks reallocate production tasks across borders.