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Labor Market Slack and the Output Gap: The Case of Korea
Author:
Mr. Niels-Jakob H Hansen
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,
Mr. Joannes Mongardini
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, and
Fan Zhang
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Series:
IMF Working Papers
Volume/Issue:
Volume 2019: Issue 167
Language:
English
Publication Date:
02 Aug 2019
DOI:
https://doi.org/10.5089/9781513508344.001
ISBN:
9781513508344
ISSN:
1018-5941
Pages:
23
Keywords:
WP; labor market slack; output gap estimate; labor force; discouraged worker; Potential output; labor markets; labor market resource; labor market condition; persistent output gap; output gap from the MVF; Output gap; Unemployment; Capacity utilization; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Output gap estimates are widely used to inform macroeconomic policy decisions, including in Korea. The main determinant of these estimates is the measure of labor market slack. The traditional measure of unemployment in Korea yields an incomplete estimate of labor market slack, given that many workers prefer involuntary part-time jobs or leaving the labor force rather than registering as unemployed. This paper discusses a way in which the measure of unemployment can be broadened to yield a more accurate measure of labor market slack. This broader measure is then used to estimate the output gap using a multivariate filter, yielding a more meaningful measure of the output gap.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2019: Issue 167