Premium
Does Trade, Technology, or Education Expel Traditional Sectors? Some Evidence from the Collapse of the Silk Sector in South Korea *
Author(s) -
Rakotoarisoa Manitra A.,
Kim Sungsoo
Publication year - 2008
Publication title -
asian economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.345
H-Index - 28
eISSN - 1467-8381
pISSN - 1351-3958
DOI - 10.1111/j.1467-8381.2006.00228.x-i1
Subject(s) - economics , silk , liberalization , wage , labour economics , international economics , international trade , market economy , engineering , telecommunications
Rapid economic growth and development often drives out traditional activities. We determine how increased trade, technology, and access to education in South Korea led to the collapse of its silk sector. Results show that although the imports of silk yarn and fabric reduced domestic silk output and prices, trade liberalization was not the sole contributor to the collapse. Inelastic labor demand for unskilled workers, skill‐biased technology, and especially increased access to education all led to a sharp rise in the relative wage of unskilled workers, and the ensuing rise in production costs contributed to the silk sector's collapse.