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[Vol.21 No.3] Artificial Market Approach to Employment Targeting: A Possibility of ‘Smart’ Employment Policy

Economic Research Institute 2015.09.30 2934

Author: Du Yong Kang(Korea Institute for Industrial Economics & Trade)






Based upon the joint design of a quantitative target and market tools, policies with an artificial market approach are expected to attain a socially-set target with high efficiency. (For example, the emission trading system theoretically attains an emission control target with minimum costs.) Since the issue of employment has a quantitative target with a high degree of social consensus, or full employment, and the related activities such as hiring and lay-off can be easily reflected to the trading market, employment policy seems to be a promising area for utilizing the artificial market.

As an exploration of the artificial market approach to employment policy, this paper introduces a policy idea, tentatively named “employment credits trading system,” and examines its expected effects. The idea is about a hiring-subsidy-based trading system, where a unit subsidy is determined as the price of a tradable credit that clears the trading market under the (un)employment target. The scheme could accomplish the employment target with minimum social costs and suggests a possibility of a more efficient and precise employment targeting.

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