Do Unions Inhibit Labor Flexibility? Lessons form Korea

Abstract

We examine whether and to what extent unions inhibit labor flexibility in the Korean manufacturing. We provide evidence that the short-run employment and hours adjustment of manufacturing regular workers decrease in the post-1987 period with the abrupt incidence of unleashing active unionism in 1987. However, negative union effects on employment adjustment are limited to male, production, and regular workers. We also note that significant part of the decrease in employment flexibility is attributed to the labor market changes toward tighter labor market with the reduced young workers.