Technological Progress and Youth Employment (in Korean)

This paper analyzes the extent to which technology progress and youth employment are related. In doing so, we divide workers into two groups - young workers and elder (prime-aged) workers - and study how differently technology progress affects demand for different groups of workers. In particular, we estimate elasticity of substitution between physical capital and workers a la Jaimovich et al. (2013) since demand for different groups of labor crucially depends on the elasticity. By using Korean labor market data between 2000 and 2014, we estimate key parameters of the production function by utilizing industry variation observed in the data. Our findings robustly indicate that the elasticity of substitution is greater (or at least not smaller) for young workers than for elder workers. This finding is robust to instrumental variable regression and to different sub-groups of workers, including educational attainment, different criteria for young/prime-aged workers, male workers, occupational groups, and size of the firms. Our findings suggest that policies that help young workers to obtain skills complement to new technology can be more efficient than policies that do not consider structural change of the labor market.