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The Analysis of Local Labor Markets
The Analysis of Local Labor Markets
  • Topic Other Publications
  • Author Insoo Jeong, Byung-You Cheon and Sang-Hoon Lim
  • Language Korean
  • Publication Date March 21, 2003
  • Length 271 Pages
  • Publisher Korea Labor Institute
  • Download1 The Analysis of Local Labor Markets.pdf The Analysis of Local Labor Markets.pdf
  • SUMMARY
    This study analyzes national databases such as the Korea Labor Institute’s Labor Panel
    Data and the Ministry of Labor’s Employment Insurance database in an effort to contribute
    to policies that are based on objective information on local labor markets. The study
    analyzes local unemployment, employment, and their determining factors. It also analyzes
    labor migration between local markets and creation of jobs in the markets. The current
    status and trends in local labor market policy in advanced countries are surveyed. Finally,
    after a study of local partnerships, the study draws policy implications.

    The analysis shows that there are large regional differences in local labor market
    unemployment, employment, and migration. It was found that the magnitude of shifts in the
    local industrial structure and the local economic conditions exerted significant influence on
    the duration of unemployment and employment and on labor migration. This points to a
    need for labor market policies that take idiosyncrasies of local labor markets into account.

    An analysis of the hazard of escaping unemployment that took truncated observations into
    account showed that the average duration of unemployment was 9.3 months in the capital
    area, whereas non-capital areas had a duration that was 2.5 months longer at 11.8
    months. Meanwhile, duration of employment differed markedly between large urban areas
    and other local areas, with the average duration at 12.5 years (150 months) in large urban
    areas and 15 years (180 months) elsewhere.

    Estimations based on a logit analysis with migration between local markets as the
    dependent variable showed that wage levels and whether the worker came from a large
    firm both had significant effects. Among industries, manufacturing increased the chances
    of migration, as did production line work among occupations. Although the number of
    observations was small, farming had an even larger effect than production work, delivering
    an unambiguous policy implication with regard to opening up the agricultural market. The
    logit analysis comparing large urban areas and other local areas showed that a worker
    from a large firm in a large urban area could expect to find another job in the same area
    after resignation. However, in other areas no evidence could be found for a large-firm
    premium. By industry, workers in manufacturing or electricity, gas, and waterworks in large
    urban areas were found to have strong tendencies to inter-regional movement. In job
    creation in local markets, persistent differences exist between regions in terms of the
    ability to generate new jobs. It was found that local markets that performed well in this
    regard before the financial crisis continued to do so after the crisis. Inter-regional
    differences in net job creation was found to be explained by differences in jobs created
    rather than jobs lost.

    A study of decentralization in OECD member countries led to the recommendation that
    decentralization in Korea be limited to the UK-style “rudimentary decentralization.” It should
    also be kept in mind that there are also severe disadvantages that follow decentralization
    in the case of public employment stabilization services, considering the possibility of rigid
    uniformity in services and nationwide labor mobility. Regarding the future direction for
    fostering local partnerships, rather than attempt to set up the same model of partnerships
    nationwide and network them, it is recommended that competitive contests be held to
    identify model cases, which should be gradually propagated.
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