Appendix: Variable List, Definition and Data Sources
Employment Rate: The ratio of employed people to the population in primary age, age 15–64. Source: OECD employment database.
Output Gap. Source: WEO.
Exposure to Technological Progress: The interaction between the relative price of investment and the country’s exposure to routinization through its initial occupational mix. The latter consists of scores that rely on occupation-level measures by Autor and Dorn (2013), which order occupations by their share of routine tasks, and then use the employment shares of these occupations to construct country-level measures of routinizability. Source: Chapter 2 of the April 2018 WEO.
Ratio of Employment in the Service Sector Relative to Employment in the Industrial Sector. Source: Chapter 2 of the April 2018 WEO.
Share of Urban Population. Source: World Bank, World Development Indicators database
Education: Share of Population within Each Gender Group with Tertiary Education. Source: Barro-Lee Educational Attainment data set.
Labor Tax Wedge: Ratio between the average tax paid by a single-earner family (one parent at 100 percent of average earnings with two children) and the corresponding total labor cost for the employer. Source: OECD Tax database.
The wedge between the tax rates of second earners and single individuals is computed as the ratio of tax second earner to tax single individual, following Chapter 3 of the April 2016 WEO. Source: OECD.
Public Spending on ALMP: active labor market program spending per unemployed person in percent of GDP per capita. Source: OECD
Trade Openness. Source: WEO
Union Density: net union membership as a proportion of wage earners in employment. Source: OECD employment database.
Public Spending on Early Childhood Education and Care as percent of GDP. Source: OECD.
Job-Protected Maternity Leave: total number of weeks of job-protected maternity, parental, and extended leave available to mothers, regardless of income support. Source: OECD.
Acemoglu, Daron, and David Autor. 2011. “Skills, Tasks and Technologies: Implications for Employment and Earnings.” In Handbook of Labor Economics, edited by Orley Ashenfelter and David Card. 4: 1043–171. Amsterdam: Elsevier.
Algan, Yann, Pierre Cahuc and André Zylberberg, 2002, Public Employment and Labor Market Performance, Economic Policy, Volume 17, Issue 35, 1 October 2002, Pages 553–569.
Ayyagari, M., A. Demirguc-Kunt, and V. Maksimovic, 2011, “Small vs. Young Firms Across the World: Contribution to Employment, Job Creation, and Growth, Policy Research,” Working Paper No. 5631. (Washington: World Bank).
Bassanini and Duval, 2006, “Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions”, OECD Economics Department Working Paper No. 486.
Cheon, Byung Yoo, et al., 2015, “A Study of Reform for Effectiveness Improvement of Employment Incentives,” Ministry of Employment and Labor, Commissioned Paper, 2015 (in Korean).
Chirinko, R., 2002, “Corporate Taxation, Capital Formation, and the Substitution Elasticity between Labor and Capital,” CESifo Working Paper No. 707 (Munich: CESifo).
Crépon, B., M. Dejemeppe and M. Gurgand, 2005, “Counseling the Unemployed: Does It Lower Unemployment Duration and Recurrence?”, https://halshs.archives-ouvertes.fr/halshs-00590769
Das, Mitali, and Benjamin Hilgenstock, 2018, “Labor Market Consequences of Routinization in Developed and Developing Economies.” IMF Working Paper 18/135 (Washington: International Monetary Fund).
Fiori G., Giuseppe Nicoletti, Stefano Scarpetta and Fabio Schiantarelli, 2012, “Employment Effects of Product and Labor Market Reforms: Are There Synergies?”, The Economic Journal, Vol. 122, No. 558, pp. 79–104.
Fougère, D., F. Kramarz, and T. Magnac, 2000, “Youth Employment Policies in France,” European Economic Review No. 44, pp. 928–42.
Haltiwanger, John Ron S. Jarmin, and Javier Miranda, 2013, Who Creates Jobs? Small versus Large versus Young”, The Review of Economics and Statistics, May 2013, 95(2): 347–361
IMF, 2016a, “Managing Government Compensation and Employment-Institutions, Policies, and Reforms Challenges”. International Monetary Fund, Washington, D.C.
IMF, 2016b, “Time for a Supply Side Boost? Macroeconomic Effects of Labor and Product Market Reforms in Advanced Economies”, Chapter 3 in World Economic Outlook (April), International Monetary Fund, Washington, DC.
IMF, 2018a, “Youth (Un)employment in Korea: Recent trends and Drivers”, Republic of Korea Selected Issues, IMF Country Report No. 18/41.
IMF, 2018b, Labor Force Participation in Advanced Economies: Divers and Prospects, Chapter 2 in World Economic Outlook (April), International Monetary Fund, Washington, DC.
Neumark, D., B. Wall, and J. Zhang, 2011, “Do Small Businesses Create More Jobs? New Evidence from the National Establishment Time Series,” The Review of Economics and Statistics, Vol. 93, No. 1, pp. 16–29 (Cambridge: MIT Press).
OECD, 2018a, Towards Better Social and Employment Security in Korea, Connecting People with Jobs, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264288256-en
OECD, 2018c, Towards Better Social and Employment Security in Korea, Connecting People with Jobs, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264288256-en
Pedersen, J., M. Rosholm and M. Svarer, 2012, “Experimental Evidence on the Effects of Early Meetings and Activation”, http://ftp.iza.org/dp6970.pdf.
Schauer, Johanna, 2018, Labor Market Duality in Korea, IMF Working Paper, WP/18/126, (Washington: International Monetary Fund).
Prepared by Edda Zoli.
The definition of SMEs in Korea has changed over time. Until 2014, it was based on the number of regular workers, sales, capital and total assets, with the thresholds varying by industry. To reduce firm incentive to stay small to continue receiving the favorable SME treatment, the definition was changed in 2015 to total assets and sales.
The international evidence on job creation by SMEs is mixed. For example, Ayyagari and others (2011) find higher job growth in small firms in a panel of 99 countries, including emerging economies, but other studies do not support these findings. For example, Haltiwanger, Jarmin, and Miranda (2013), using a large set of U.S. companies find that once firm age is controlled for, there is no systematic relationship between firm size and employment growth. This result points to the important role of business start-ups and young businesses, rather than small firms, in job creation.
These include, for example, accelerated depreciation for facility investment by SMEs, allowing SMEs to carry back losses to apply against income in the previous year (OECD, 2015).
Korea’s spending on employment incentives may be even higher. According to Park (2016), Korea’s spending on employment incentives in 2016 was about 0.2 percent of GDP, with 20 employment incentives in operation under four ministries for a total budget of 2.8 trillion won.
The government is planning to expand public sector jobs by 810,000 by 2022 (MOEF, 2018). In the 2019 budget the government indicated the intention to increase social services jobs by 60,000 to 94,000 and civil service jobs (e.g., policy officers and) by 21,000.
A detailed variable list, with definition and sources is presented in the Appendix.
From a theoretical point of view, the net effect of higher taxes on labor supply is ambiguous. As higher labor taxes reduce net wages, individuals may respond by working more to maintain their income. On the other hand, by lowering the relative return to work, higher taxes may lead to lower participation.
Disaggregated spending on different ALMPs (e.g., training, employment incentives, etc.) was also included in some model specifications. However, because of limited data availability, empirical results were not robust.
IMF (2018b) offers a thorough discussion of possible drivers of long-lasting changes in demand for workers’ skills, including the secular expansion of the service sector and technological progress that allow automation of routine jobs.
2013 is the latest year for which cross-country comparable data on public spending on early childhood education and care is available for most OECD economies.