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Labor Market Duality in Korea and Policy Responses (in Korean)

Author

Listed:
  • Jeon, Byung-you

    (Graduate School for Social Innovation Business and Social Enterprise Leaders, Hanshin University)

  • Hwang, In Do

    (Advisor to the Governor, The Bank of Korea)

  • Park, Kwangyong

    (Economic Research Institute, The Bank of Korea)

Abstract

This paper reviews the previous literature regarding the state and causes of labor market duality in Korea, provides brief empirical evidence on the existence of labor market duality, and suggests possible remedies for resolving the duality based on the experiences from four European countries which differ in the severity of the labor market duality. We confirm the existence of the duality based on the wage gap and immobility in two dimensions: large-small firms and permanent-temporary positions. Lastly, we suggest some countermeasures to mitigate the duality problem. First, the government need to supervise the contracts between large and small firms to enhance fairness in the contracts. Second, employers and unions may consider a new wage negotiation system in which wages can be determined collectively within an industry. Third, it is necessary to remove blind areas in social insurance system and provide universal income support programs for low-income employees to guarantee the economic security.

Suggested Citation

  • Jeon, Byung-you & Hwang, In Do & Park, Kwangyong, 2018. "Labor Market Duality in Korea and Policy Responses (in Korean)," Working Papers 2018-40, Economic Research Institute, Bank of Korea.
    • Handle: RePEc:bok:wpaper:1840
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    File URL: https://www.bok.or.kr/ucms/cmmn/file/fileDown.do?menuNo=500788&atchFileId=FILE_000000000007793&fileSn=1
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    More about this item

    Keywords

    Labor market duality;

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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