Industrial Organization Effects of High-Speed Rail Service Introduction in Korea

The goal of this thesis is to investigate changes in consumers' choices and their welfare due to the introduction of new products, taking firms' reactions into consideration. I perform empirical analyses using Korean transportation industry data to evaluate the impact of high-speed train introduction on passenger travel. This work adds to the existing literature by considering the changes in product characteristics or the set of products offered to consumers after new product introduction, and investigates how those changes affect consumer welfare. The analysis provides a rich insight into the transportation industry and the relationship between the modes of transportation which contributes to enhancing the quality of government's policies regarding related industries. The first part of my thesis investigates the changes in utilization of different modes of transportation in Korea after the introduction of high-speed train using a fixed effect model and a difference in differences model. My results show the significant impact of the introduction of high-speed train on the entire transportation industry and provide evidence that modes of transportation not only compete but also complement each other. After high-speed trains were introduced in 2004, inter-city bus and airline industries lost their customers in routes where they directly competed with high-speed rails, while the numbers of rail passengers increased. The losses in the airline industry were particularly severe. On the other hand, the passengers of other rail lines for some routes not connected by high-speed trains but branch routes of high-speed rail lines, increased. The increase was perhaps induced by the consumers who traveled on those routes in order to reach high-speed rail lines. After the introduction of high-speed trains, other changes such as service schedule adjustment ensued. The results from the reduced form models show only the overall impact of high-speed train introduction, but they cannot disentangle the impact of high-speed train introduction itself from that of ensuing changes. In order to separately examine the impact of high-speed train introduction and that of ensuing changes in product characteristics, I estimate a structural model of the demand for travel that incorporates consumers' heterogeneous preferences over travel schedules into a standard discrete choice model. The model treats the rail company's choice of train schedules as endogenous in order to take the firm's choices of product line into account. My results show that consumers are affected differentially by both the introduction of high-speed trains and the ensuing changes in train schedules. The welfare implications for consumers depend on the availability of high-speed trains in their choice set. Consumers who travel between two cities that are connected by high-speed trains are the main beneficiaries of the new service. However, reductions in schedule frequencies of non-high-speed trains operating along high-speed rail lines, generate losses that offset 50% of gains even for these consumers. Travelers on these lines who are not served by high-speed trains only experience substantial losses due to reduced schedule frequencies. Consumers who travel between two cities that are not located along high-speed rail lines gain from increased train frequencies, and the gains make up for the losses in other markets without high-speed trains. These results highlight the importance of accounting for changes in existing products when analyzing the impact of new product entry on consumers

Effect of High-speed Train Introduction on Consumer Welfare

This paper examines the impact of introducing high-speed trains on consumer welfare using South Korean transportation industry data. The model treats the rail company’s choice of train schedules as endogenous in order to take the firm’s choices of product line into account. I estimate a model of the demand for travel that incorporates consumers’ heterogeneous preferences over travel schedules into an otherwise standard discrete choice model. My results show that consumers are affected differentially by both the introduction of high-speed trains and the ensuing changes in train schedules. The welfare implications for consumers depend on the availability of high-speed trains in their choice set. Consumers who travel between two cities that are connected by high-speed trains are the main beneficiaries of the new service. However, reductions in schedule frequencies of non-high-speed trains operating along high-speed rail lines, generate losses that offset 50% of gains even for these consumers. Travelers on these lines who are not served by high-speed trains only experience substantial losses due to reduced schedule frequencies. Consumers who travel between two cities that are not located along high-speed rail lines gain from increased train frequencies, and the gains make up for the losses in other markets without high-speed trains. These results highlight the importance of accounting for changes in existing products when analyzing the impact of new product entry on consumers

The Impact of Minimum Wage Introduction on Characteristics of New Establishments: Evidence from South Korea

This paper examines whether imposing minimum wage alters the characteristics of new businesses. Applying a difference-in-differences framework to repeated cross-sectional data of new plants, we explore the impact of minimum wage introduction on characteristics of new plants in South Korea. We first confirm that the minimum wage introduction induced new plants to have higher remuneration to workers. Due to the imposed minimum wage, the new plants tend to start with fewer employees and to equip their employees with more capital. Finally, we find that the minimum wage introduction led to higher labor productivity among entering plants

The Impact of Improved Passenger Transport System on Manufacturing Plant Productivity

In this paper, we examine the effect of transportation infrastructure on the productivity of manufacturing plants. In particular, we analyze whether improved passenger transportation connections to metropolitan cities positively affects manufacturing plant productivity in non-metropolitan counties. The recent introduction of the Korea Train eXpress(KTX) high-speed train allows us to study the causal impact of improved passenger transport. We apply a difference-in-differences framework to plant-level data, by exploiting the exogenous timing of high-speed train introduction and the location of the new KTX stations which have not been altered endogenously. Specifically, we compare the plants in counties without high-speed train stations with those in the counties with high-speed train stations. The empirical results suggest an increase of approximately 4.6 percent in the productivity of manufacturing plants due to the introduction of the high-speed train. Our analysis suggests this might have resulted from increased ability to recruit highly skilled younger workers to the manufacturing plants connected by the KTX high-speed train

How Does the Impact of Tobacco Control Policies Change Over Time?

In this paper, we examine the dynamic effect of tobacco control policies on tobacco consumption using the recent implementation of such policies in Korea. The results show that such policies discretely reduce the incidence and amount of tobacco consumptions. We document that after the initial drop, spending on tobacco products gradually recovered towards the pre-policy level. We also find that there is considerable heterogeneity in the persistence of the impact of tobacco control policies. For higher income households, the impact dissipated approximately six months after the implementation of the policy whereas for low-income households, it persisted through the first year

Firm’s Employment Adjustment in Response to Labor Regulation

In this paper, we examine the impact of the labor regulation on firm's employment. South Korea's labor reform in 2007 restricted the duration of the specific types of temporary contract — fixed term and dispatched contract — to maximum two years and required those temporary contracts to be converted into permanent contracts after the maximum duration. We exploit the fact that the impact of the reform is larger for the establishments that used those temporary workers intensively and apply a difference-in-difference framework. Our empirical analysis shows that stronger employment protection reduces the establishment's labor use. Moreover, we find that businesses try to mitigate the impact of the employment protection by reducing the use of fixed-term and dispatched contracts and increasing the use of atypical temporary contract that are not restricted by the reform. We also find that this shift towards legally less burdensome contract workers becomes more prevalent when the labor union exists

Higher Education, Productivity Revelation and Performance Pay Jobs

This paper examines the impact of college education on workers’ subsequent careers, based on a direct role of college graduation on the revelation of workers’ individual ability. Using NLSY79, we document a positive relationship between ability and signaling behavior for high school graduates and a non-positive relationship for college graduates. Moreover, we show active job mobility for high ability high school graduates. We argue that these patterns are the result of post-schooling signaling of high school graduates whose individual ability, unlike college graduates, is not observed in the beginning of their careers

Does Higher Education Affect Health and Health Behaviors?: Evidence from a Regression Discontinuity Design

This paper examines the causal effect of higher education on health related outcomes. To address the endogeneity in educational attainment, we exploit the educational reform in Korea which has increased the opportunity to engage in college education for affected cohorts. Using the regression discontinuity design, we do not find supportive evidence for health return of higher education. Moreover, we find that higher education has limited causal effects on health behaviors such as smoking and drinking. The limited effect might be a result of universal health care system in Korea which provides health insurance for practically all individuals

Unintended learning in primary school practical science lessons from Polanyi’s perspective of intellectual passion

This study explored, from the perspective of intellectual passion developed by Michael Polanyi, the unintended learning that occurred in primary practical science lessons. We use the term ‘unintended’ learning to distinguish it from ‘intended’ learning that appears in teachers’ learning objectives. Data were collected using video and audio recordings of a sample of twenty-four whole class practical science lessons, taught by five teachers, in Korean primary schools with 10- to 12-year-old students. In addition, video and audio recordings were made for each small group of students working together in order to capture their activities and intra-group discourse. Pre-lesson interviews with the teachers were undertaken and audio-recorded to ascertain their intended learning objectives. Selected key vignettes, including unintended learning, were analysed from the perspective of intellectual passion developed by Polanyi. What we found in this study is that unintended learning could occur when students got interested in something in the first place and could maintain their interest. In addition, students could get conceptual knowledge when they tried to connect their experience to their related prior knowledge. It was also found that the processes of intended learning and of unintended learning were different. Intended learning was characterized by having been planned by the teacher who then sought to generate students’ interest in it. In contrast, unintended learning originated from students’ spontaneous interest and curiosity as a result of unplanned opportunities. Whilst teachers’ persuasive passion comes first in the process of intended learning, students’ heuristic passion comes first in the process of unintended learning. Based on these findings, we argue that teachers need to be more aware that unintended learning, on the part of individual students, can occur during their lesson and to be able to better use this opportunity so that this unintended learning can be shared by the whole class. Furthermore, we argue that teachers’ deliberate action and a more interactive classroom culture are necessary in order to allow students to develop, in addition to heuristic passion, persuasive passion towards their unintended learning