Jobless Growth in the Manufacturing Industry - Decoupling Sectoral Output and Employment in the United States and South Korea

Jobless growth in the South Korean manufacturing industry has been observed since 2015. Even as total value added in the manufacturing sector is continuously growing, manufacturing employment levels are decreasing; this pattern first emerged in the 1990s, lasting for a decade. The decoupling of output and employment in the manufacturing industry is atypical compared to the commonly stylized facts showing that both employment and output grow together in the long run and decline together during recessions at the aggregate level of an economy. This article analyzes which subsectors account for the jobless growth pattern in the South Korean manufacturing industry. Importantly, a recent cyclical downturn in automotive and shipbuilding manufacturing cannot explain the negative correlation between sectoral output and employment. Instead, the jobless growth pattern is observed within the computers and electronics manufacturing subsector, and it offsets the other sectors’ positive correlation between output and employment. I classify the jobless growth patterns of the manufacturing industry by comparing the United States and South Korea to address political suggestions. If the jobless growth in the South Korea followed the trace of the United States, then manufacturing employment would not easily increase despite an export revival or an output recovery in future.