Author : Wooyoung Kim
This paper analyzes the responses of the labor market to the business cycle as well as the changes in those responses after the Korean financial crisis which occurred in late 1997 and early 1998. The characteristics of the Korean labor market responses to the business cycle found in this research are as follows.
The unemployment rate responded to the business cycle symmetrically in both boom and recession before the crisis. But after the crisis, the response of the unemployment rate to the business cycle became asymmetric and the response became bigger in recession than in boom.
Each age group shows a different pattern in the responses of the unemployment rate to the business cycle. Young people in their 20’s and 30’s have experienced unstable employment. Their unemployment rate of those in their 30’s responded symmetrically to the business cycle before the crisis and then their responses got bigger after the crisis. Even though the 40’s and 50’s group had enjoyed stable employment before the crisis, their employment conditions rapidly destabilized after the crisis. The size of the labor force witnessed a symmetric response to the business cycle did not change in its way of responding to the business cycle after the crisis. But the way of responding reveals a huge difference by gender. Though the male labor force does not show any systematic response in terms of its size to the business cycle, the size of female labor force fluctuates closely in line with the business cycle does. But the crisis did not bring about any change to the response of the size of the female labor force.
JEL Classification Number : E24, E32
Key words : Okun’Ês law, Business cycle, Unemployment rate, Labor force