Trade liberalization and labor movement in the East Asian newly industrialized countries (Hong Kong, Korea, Singapore, Taiwan, China)

The purpose of this dissertation is to examine the impact of trade liberalization on the adjustments of employment and wages in the manufacturing industries of Hong Kong, South Korea, Singapore, and Taiwan, which are now classified as four Asian Newly Industrialized Countries (NICs). Wage inequality, one of the controversial issues in the trade and labor context, will also be examined, specifically in S. Korea. These NICs were the second largest hosts of Foreign Direct Investment (FDI) among Less Developed Countries (LDCs) between 1993 and 1998. In addition, the import shares of Hong Kong, S. Korea, Singapore and Taiwan were ranked 9th, 11th, 12 th and 15th, respectively during this period. As a result, trade has played an important role in their economies, as well as in the world economy.; The first part of this dissertation examines the impact of increasing import competition on employment and wages in the four NICs. The aggregated industrial level of annual data will be used, consisting of twenty-eight International Standard Industrial Classification (ISIC) three-digit manufacturing industries over the 1980--1997 period. The goal of this paper is to determine whether there exists any distinctive feature in the NICs' labor market in contrast to that of the Developed Countries (DCs). Estimated is the reduced form of employment and wage equations derived from a standard competitive model of labor demand and supply that determines factor allocations and factor prices across industries. The empirical result indicates that import competition significantly decreases both employment and wages in these NICs.; The second part of the dissertation examines the impact of trade liberalization on wage inequality in Korea, one of the NICs. Based on accounting decomposition analysis, the trade effect on wage inequality outweighs the technology effect in Korea. The motivation for studying the subject of wage inequality stems from the global trend toward increasing wage inequality. If trade contributes to increasing wage inequality in DCs, one should then observe the reverse wage movement in the LDCs under the Hecksher-Ohlin-Samuelson (HOS) model. The empirical results demonstrate that, as a result of increasing import shares, wage inequality between production and nonproduction workers in Korea, however, rose in the whole manufacturing sector during the 1990s as well as in the high and low capital-intensive (or import share) industries. FDI, which also increased noticeably in this period, did not much impact on wage inequality because FDI was given relatively little weight in the Korea's manufacturing sector.