Economic Effects of a Job Guarantee Program for the Korean Economy (2010–2020): A Simulation Study

The Job Guarantee (JG) is a policy proposal that the government guarantees jobs for everyone able and willing to work but unable to find a job, providing a living wage and full welfare benefits. Proponents of the JG claim that it could enhance economic stability and mitigate social inequality. In contrast, opponents of the JG have questioned its feasibility in the real world. In order to address this question empirically, this study presents simulated effects of the JG on the Korean economy from 2010–2020. It shows that, first, the real GDP would have increased by 1.8% on average; second, the JG would have increased the employment rate outside the JG system by 0.9%p; third, the JG would not have brought persistent inflation pressure; fourth, it would not have caused a balance of payment deficit; finally, the net cost of JG would have been on average 0.8% of GDP, which is smaller or similar to those that other simulation studies in this research field have proposed. These results imply that most concerns that could be raised against JG do not apply to the Korean economy.