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BOK Working Paper No.2018-31, Technological Progress and Youth Employment

Economic Research Institute (82-2-759-5349) 2018.10.07 3114

Title : Technological Progress and Youth Employment

Author : Myungkyu Shim (Sogang University), Hee-Seung Yang(KDI School of Public Policy and Management), Seohyun Lee(BOK)


This paper aims to assess the effect of investment-specific technology shocks(IST shocks) on the gap of wages and employment between different groups of workers in the Korean labor market. IST shocks can be identified by four long-run restrictions in a Structural Bayesian VAR framework. First, workers are categorized into skilled(college graduates and more) and unskilled(high-school graduates and less) ones by their educational attainment. After each shocks activates, including IST·skill-biased technology·other technology shocks, changes in the Skill-Unskill wage gap(skill premium) and employment differentials are examined. Second, workers are re-categorized into routine(tasked on repetitive and procedural jobs) and non-routine ones by their occupational tasks. By simulating IST·routine-labor productivity·other technology shocks respectively, it is originally checked how the Routine-Nonroutine wage gap and employment differentials will change.

This paper shows that positive IST shocks can decrease the Skill-Unskill wage gap and increase the Routine-Nonroutine wage gap. It is also found, however, that positive IST shocks can not drive significant changes in employment differentials by any categorization.