The Role of Exports in the Korean Labor Market

Abstract

Recently, concerns are rising in Korea regarding the continuous slump in the manufacturing labor market, including a high youth unemployment rate. Contrary to people's expectations, there is no sign of recovery in the labor market despite the recent upswing in exports. The Korea's past export strategy, which mainly focused on labor-intensive industries to drive successful industrialization and economic growth during the 1970s-90s, cannot keep its effect of creating jobs enough. For the past 20 years since 1990, Korea's exports have grown at an annual average rate of 7.8 percent, while employment has declined at an average rate of 0.2 percent. The fact that exports do not create sufficient jobs is a grave issue for the manufacturing-based export-driven economy like Korea. Therefore, it is an important policy question to identify main reasons why the virtuous circle between exports and employment has weakened considerably.