The Paradox of “Unlimited” Labor and Rising Wages
The forces behind the operation of the labor market and real wage increases in South Korea are examined. It is argued that in industries in which the technology transfer problem was fairly complicated and in which Korea lacked experience, workers were paid relatively high wages, not because of a shortage of particular skills, but in order to induce them to exercise their intelligence and make imported technology work. The wage rate in Korea was driven up especially fast by the exigencies of learning because the learning experience was especially intense since it was undertaken by local rather than foreign firms, happened in a great spurt, and occurred in large, bureaucratic enterprises. Business was also pressured by government to share its wealth with labor. Because scarcity and demand alone cannot explain the operation of the labor market, the chapter ends with a discussion of the imperatives of technology and the skill set of late industrialization that have driven big businesses to pay more.
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