World Economy Brief
RESEARCH
World Economy Brief
The Impact of Trade Shocks on Labor Reallocation in South Korea
- Author Kyong Hyun Koo
- Series25-25
- Date2025-09-18
This study analyzes how workers were reallocated across industries or occupations during the process of labor demand adjustment in South Korean domestic industries following exogenous trade shocks caused by the economic rise of China and Vietnam. It examines whether Korea's labor market was sufficiently effective in terms of labor movement from comparative disadvantage sectors to comparative advantage sectors in response to changes in trade. Through this analysis, the study aims to understand the mechanisms by which inefficiencies in Korea's labor reallocation process lead to workers' income decline and derive policy implications.
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