The Unassuming Economist

From the latest IMF report on Korea’s youth unemployment:

“While Korea’s rate of youth unemployment is low in international comparison, it has recently increased. In addition, the share of inactive youth is exceptionally high. These developments are concerning as extensive research has shown long-lasting negative effects for individuals affected and the society and economy as a whole.

This paper discusses the potential drivers behind youth unemployment in Korea, the various measures taken by the authorities and best practices from the literature and other countries. The analysis suggests that various factors have contributed to the current situation, including cyclical, structural and policy variables. In particular, weak consumption, a temporary increase in the youth cohort and expectation and skill mismatches are likely responsible. Moreover, issues with educational quality, a focus on direct job creation and high protection of regular workers and the resulting labor market duality have also contributed.

The Korean government has already made significant and comprehensive efforts to tackle youth employment issues and plans to further expand on them. Based on a growing literature of international experiences and policy evaluations, the government could consider (i) fine-tuning existing measures, (ii) expanding preemptive measures and (iii) addressing general cyclical and structural impediments.”