The Micro-Level Anatomy of Korea’s Rising Labor Share

다국어 초록 (Multilingual Abstract)

This paper investigates the unique upward trend in the corporate labor share in South Korea since the 2000s, contrasting to the global decline observed during the same period.
Analyzing financial statements from externally audited Korean firms, the study reveals that the increase in labor share is pervasive across all sectors, driven primarily by within-firm effects rather than the between-firm effects observed in the decline in the U.S. Notably, large firms have experienced a significant rise in labor share, attributed to the relatively slower growth in value-added compared to wages. The study also identifies a decreasing trend in industry concentration in South Korea, diverging from the increasing concentration and markups seen in the United States. These findings challenge the prevailing narrative attributing declining labor shares to technological advancements and the emergence of superstar firms, instead highlighting distinctive dynamics within the Korean corporate sector.