Job Flow and Unemployment in Korea: A Search-Theoretic Approach (in Korean)

Hyewon Kim ()
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Hyewon Kim: Korea Labor Institute

Economic Analysis (Quarterly), 2006, vol. 12, issue 2, 26-66

Abstract: This paper presents a simple search-theoretic model which explains the difference of job destruction rate and job separation rate endogenously. We propose the decomposition of actual productivity into potential productivity and matching productivity. A productivity shock of the latter type can produce separation of workers and firms without job destruction, while a shock of the former type produces both job separation and job destruction. If the variability of the matching productivity shock decreases and that of the potential productivity shock is stable, the job separation rate and unemployment rate decrease and the job destruction rate will not change according to this model under certain conditions. This result is consistent with the empirical fact that the job destruction rate was relatively stable in the Korean mining and manufacturing sector and the job separation rate and unemployment rate trended downward during the 1980s and 1990s.

Keywords: Unemployment rate; Job Seperation rate; Job Destruction rate; Job Flow; Search Model (search for similar items in EconPapers)
JEL-codes: J63 J64 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:bok:journl:v:12:y:2006:i:2:p:26-66

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