Capital-labor relations and economic development: Theoretical essays and a case study of South Korea

Abstract

This thesis explores how capital-labor relations could affect economic development. An overview of the subject matter is given in the introductory chapter. The first theoretical essay analyzes how effort extraction strategies vary according to the technical and organizational characteristics of the production processes and the labor institutions. It thereby shows the ways in which capital-labor relations and industrial development are interrelated. The following essay examines the implications of the efficiency wage hypothesis when it is applied to the dynamic industrial learning process. They include such unconventional results as desirability of infant industry protection even when neither externalities nor capital market imperfections exist, superiority of a selective and sequential protection to an across-the-board and synchronized protection, and the potential use of industrial licensing in reducing policy credibility problems. The next essay turns to the macroeconomics of income distribution between wages and profits. Its principal conclusion is that a higher degree of economic openness of a country makes it more likely that an increase in the wage share--or, a profit squeeze--will have a contractionary effect. The final essay is an empirical investigation of the relationship between the capital-labor relations and economic development in South Korea since the early sixties. Some of the results obtained in the theoretical essays are found to be highly relevant in understanding the successful industrialization in South Korea.