• Journal of the Korea Academia-Industrial cooperation Society
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• v.13 no.4
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• pp.1603-1608
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• 2012

This paper aims to build a model of unemployment duration, in which each type of unemployment duration can be defined as a function of other exogenous variables. Recently, the so-called mismatch in the labor market has become a big issue in most countries. It is very obvious that 'mismatch' is deeply related to the long duration of unemployment status. Two problems may be head and tail of the same coin. Employing a simple analysis of Markov stochastic process, the model of unemployment duration developed here is useful for seeing the effects of shocks on unemployment duration. The model allows us to distinguish the determinants of different kinds of unemployment and to identify the nature of unemployment duration.

• Korean Journal of Social Welfare
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• v.37
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• pp.1-31
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• 1999

In Korea, little is known about unemployment duration and exit rate from unemployment. This paper empirically examines the duration of unemployment using data for the years 1996 and 1997 on unemployed individuals who are eligible for unemployment insurance benefits in Korea. A parametric survival model (log-normal model) is adopted to identify factors predicting transitions to reemployment. Factors that affect unemployment duration are sex, age, employment duration (year), prior salary, region, prior employment industry, cause of unemployment, officially determined unemployment benefit duration, degree of benefit exhaustion, and amount of benefits for early reemployment. However, education is not statistically significant In degree of benefit exhaustion, the exit rate from unemployment decreases as benefit exhaustion is approached. In amount of benefits for early reemployment, the exit rate from unemployment increases as amount of benefits increases. Hazards for reemployment gradually increase until 80 days after unemployment and gradually decrease in the following period. Thus, we find that distribution of hazards for reemployment has log-normal shapes between inverted U and inverted L This paper takes advantage of a unique analysis about unemployment duration and exit rate from unemployment in the Korean Unemployment Insurance system which functions as the most valuable social safely-net mechanism in the recent national economic crisis. Indeed, this paper provides a basic knowledge about realities of unemployed individuals in the Unemployment Insurance system and identifies research areas that require further study.

• Korean Journal of Social Welfare
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• v.39
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• pp.5-40
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• 1999

Little is known about unemployment duration and re-employment pattern. This paper empirically examines unemployment duration and re-employment pattern using data by the 1998 national survey about the unemployed and their needs. A parametric survival model(Weibull model) is adopted to identify variables predicting unemployment duration. It is found that the data including people without unemployment insurance as well as people with unemployment insurance fit the Weibull model including the hazard distribution that the hazard of reemployment is increasing at an decreasing rate. Variables that affect unemployment duration are age, householdership, family income, size of prior employment organization, and cause of unemployment. In re-employment pattern, statistically significant variables are age, type of prior employment industry, prior employment pattern, and membership in unemployment insurance. This paper provides a basic knowledge about realities of unemployed individuals in the economic crisis period of Korea, identifies research areas for further research, and develops policy implications for the unemployed.

• Journal of Labour Economics
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• v.23 no.2
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• pp.39-59
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• 2000

Given the constraint that the unemployment benefit is not allowed to vary freely over the unemployment duration, this paper examines the optimal UI benefit structure. In particular, identifying the conflicting effects of benefit amount and benefit duration upon incentive and insurance, this paper characterizes the optimal combination of UI benefit amount and duration. Based upon some important factors determining the optimal UI benefit structure that are derived from the model, a set of directions for UI reform in Korea have been proposed.

• Journal of Labour Economics
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• v.27 no.3
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• pp.75-111
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• 2004

On the basis of data from the National Longitudinal Survey of Youth (NLSY), this paper investigates wage consequences of cumulative experience of job displacement. Unlike previous studies, we consider two measures of cumulative unemployment experience simultaneously: the total frequency and the cumulative duration of unemployment induced by job displacement. When frequency and cumulative duration compete in a wage equation, only cumulative duration remains significant for men, while only frequency matters for women. For men, a one-month increase in the cumulative duration of displacement-initiated unemployment leads to a fall in wages by 0.4 percent. This finding is quite robust with respect to various sample restrictions and/or estimation methods. For women, approximately a 2.5 percent wage reduction is associated with an additional event of displacement.

• KDI Journal of Economic Policy
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• v.40 no.3
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• pp.1-44
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• 2018

This paper studies the macroeconomic effects of an enhancement in unemployment benefits in Korea. In particular, I quantify the welfare effect of two specific policy chances which have been mainly discussed among policymakers in recent years: increasing wage replacement rates by 10%p and extending maximum benefit durations by one month. To this end, I build and calibrate an overlapping generation model which reflects the heterogeneity of the unemployed and the specificity of the unemployment insurance (UI) system in Korea. The quantitative analysis conducted here shows that extending maximum benefit durations by one month improves social welfare, whereas increasing wage replacement rates by 10%p deteriorates social welfare. Extending maximum benefit durations is applied to potentially all the UI recipients, including unemployed workers whose wage before job loss is relatively low and whose marginal utility is relatively high. However, increasing wage replacement rates is applied to only a small number of UI recipients whose wage before job loss is relatively high, while the increase in the UI premium is passed onto all of the employed. This study suggests that given the current UI system and economic environment in Korea, it is more desirable to extend maximum benefit durations rather than to increase wage replacement rates in terms of social welfare.

• Journal of Labour Economics
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• v.26 no.1
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• pp.111-151
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• 2003

This study attempted to analize the hazard rate from unemployment and the influncing factors on the rate by regions. The data this study uses is Korea Labor Institute Panal Study(1998-2001) and the models are hazard analysis and Cox model. The results of hazard analysis are as follow. In capital and it's vicinity, the duration of unemployment is shorter than other regions even if the unemployment rate is higher. The labor market segmentation is confirmed between capital and it's vicinity region and other regions. Kyungsang region is higher in the unemployment hazard rate than Chunla or Chungchung regions. The duration of unemployment in capital and it's vicinity is 9.29 months comparing 11.86 months in the other region. The difference is statistically significant by the significance level 0.001. The duration of unemployment in Kyungsang is 6.96 months comparing 10.95 months in Chunla region. The Cox results which indicate the influncing factors on the hazard rate are as follow. In the regions like non-metro cities and non-capital and vicinitiy, the factors such as female, tenure, wage earners, manufacturing, wholesale and retale decrease the hazard rate. The results indicate that active labor market policies region by region are needed in Korea, especially for the marginal unemployed workes from non flourishing sectors.

• Journal of Labour Economics
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• v.25 no.1
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• pp.75-95
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• 2002

Using 3 years of panel data on nearly 3,507 households, the Korea Labor Income Panel Survey(KLIPS) data, the authors measure the determinants of poverty and unemployment, and the extents to which poverty influenced unemployment. The probit analysis of unemployment shows that unemployment probability is lower, when male, lower age and is higher, high-school and over junior college, work duration is over 3 years. The probit analysis of poverty shows that poverty probability is lower, when male, higher education level, longer career. specially unemployment and social insurance is determinants of increasing poverty. Bivariate probit model of unemployment and poverty also provides similar findings to those probit analysis and shows an evidence of the influence of unemployment on poverty along with the positive role of social welfare policy such that social welfare receipt reduces the impact of unemployment on poverty.

• 재활복지
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• v.17 no.4
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• pp.127-149
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• 2013

This study analyzed the hazard of unemployment and the influencing factors on the rate. Data came from the Panel Survey of Employment for the Disabled(PSED), 2010-2012, which is a longitudinal survey for 5,092 disabled people in Korea. For the main purpose of this study, the life-table method was used for describing the patterns of unemployment duration by disabled, and the cox proportional hazard model was used to identify significant factors on the unemployment duration. The results were as follows. First, according to the life table analysis, the unemployment rate to remain until the longest period of unemployment(25month) is 90.5%, and the rate of entry into the labor market was only 9.5%. Overall, the unemployment maintenance rate was high, the unemployment escape rate decreased after 12month. Second, looking at the results from the cox proportional hazards model, the unemployment escape possibility were increased for those who are male, are non-public benefit recipient with disability, have mild disability, and have less discrimination experiences. With these results, disability discrimination act which can reduce the disability discrimination in employment site should be strengthened. Also, the scheme of Nation Basic Protection Program should be modified to attract the employment of recipients with disability. Finally, policy targets having employment escape difficulty, such as women with disability, people with severe disabilities should be departmentalized. And employment service is provided in accord with the individual needs and characteristics.

• KDI Journal of Economic Policy
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• v.32 no.1
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• pp.131-169
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• 2010

I develop a matching model in which risk-averse workers face borrowing constraints and make a labor force participation decision as well as a job search decision. A sharp distinction between unemployment and out of the labor force is made: those who look for work for a certain period but find no job are classified as the unemployed and those who do not look for work are classified as those out of the labor force. In the model, the job search decision consists of two steps. First, each individual who is not working obtains information about employment opportunities. Second, each individual who decides to search has to take costly actions to find a job. Since individuals differ with respect to asset holdings, they have different reservation job-finding probabilities at which an individual is indifferent between searching and not searching. Individuals, who have large asset holdings and thereby are less likely to participate in the labor market, have high reservation job-finding probability, and they are less likely to search if they have less quality of information. In other words, if individuals with large asset holdings search for job, they must have very high quality of information and face very high actual job-finding probability. On the other hand, individuals with small asset holdings have low reservation job-finding probability and they are likely to search for less quality of information. They face very low actual job-finding probability and seem to remain unemployed for a long time. Therefore, differences in the quality of information explain heterogeneous job search decisions among individuals as well as higher job finding probability for those who reenter the labor market than for those who remain in the labor force. The effect of the extended maximum duration of unemployment insurance benefits on the aggregate labor market and the labor market flows is investigated. The benchmark benefit duration is set to three months. As maximum benefit duration is extended up to six months, the employment-population ratio decreases while the unemployment rate increases because individuals who are eligible for benefits have strong incentives to remain unemployed and decide to search even if they obtain less quality of information, which leads to low job-finding probability and then high unemployment rate. Then, the vacancy-unemployment ratio decreases and, in turn, the job-finding probability for both the unemployed and those out of the labor force decrease. Finally, the outflow from nonparticipation decreases with benefit duration because the equilibrium job-finding probability decreases. As the job-finding probability decreases, those who are out of the labor force are less likely to search for the same quality of information. I also consider the matching model with two states of employment and unemployment. Compared to the results of the two-state model, the simulated effects of changes in benefit duration on the aggregate labor market and the labor market flows are quite large and significant.