Browsing by Author "Shin, Donggyun"

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Open Access
Inflation and wage rigidity/flexibility in the short run
(Te Herenga Waka—Victoria University of Wellington, 2019) Park, Seonyoung; Shin, Donggyun
A recent literature uses accurate wage data from payroll records and provides compelling evidence against the conventional belief that nominal wages are downward sticky. This paper provides a unique contribution to this literature by conducting a formal analysis of the role of inflation in cyclical wage rigidity/flexibility. Analysis of payroll-based wage data from the Korean labor market for the period 1971 to 2014 finds that the degree of downward nominal wage flexibility is countercyclical, and the countercyclicality becomes stronger during a deflationary, relative to inflationary, recession. This serves as a counter-example to the conventional theory of cyclical wage rigidity.
Open Access
Recent Changes in the Nature of Distribution Dynamics of US County Incomes
(Te Herenga Waka—Victoria University of Wellington, 2020) Park, Seonyoung; Shin, Donggyun
Analysis of US county per capita incomes from 1970 to 2017 reveals the emergence of bipolarizing distribution dynamics from the early 1990s. This bipolarization process is characterized by the vanishing middle income counties mostly joining the high end of the distribution of county incomes. Cross-county differences in education and industry composition contribute to the bipolarization, but government transfers effectively reverse it. The results for these recent decades weakly support the two-club convergence hypothesis. A simulation of various nonlinear income growth dynamics and corresponding distributional dynamics reveals certain conditions on growth patterns for income bipolarization.
Open Access
Welfare consequences of rising wage risk in the United States: Self-selection into risky jobs and family labor supply adjustments
(Te Herenga Waka—Victoria University of Wellington, 2020) Park, Seonyoung; Shin, Donggyun
Wages in the United States have become more volatile since the early 1970s. This paper quantitatively demonstrates that the welfare cost caused by this change is substantially overstated when heterogeneity in individual risk preferences and workers'risk choices are neglected. Family labor supply adjustments reduce the welfare cost and do so most effectively when borrowing and saving behavior is allowed. It is also found that wives increase their labor supply signi ficantly in response to increases in the variance of husbands' permanent wage shocks, and this `added-worker' effect is mostly accounted for by wives' labor supply adjustments on the extensive margin.