Labour supply elasticities in Korea: estimation with borrowing-constrained couples

This paper aims to provide reliable estimates for labour supply elasticities in Korea. Following Bredemeier et al. (2019), we exploit information on a worker's relative contribution to household earnings when estimating the Frisch labour supply elasticity to mitigate the downward bias in the presence of borrowing constraints. Using the Korean Labour and Income Panel Study data (2000-2018), we find that the labour supply elasticity in Korea is 0.23. In addition, elasticities are estimated to be 0.27 for men and 0.21 for women, confirming a greater bias for men than for women when the borrowing constraint is ignored.