Occupational Task Distance and the Wage Cost of Involuntary Job Loss in South Korea

Joohyun Lee
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Joohyun Lee: Korea Institute for Industrial Economics and Trade

Industrial Economic Review from Korea Institute for Industrial Economics and Trade

Abstract: Using a continuous measure of task distance between occupations built from O*NET descriptors, this paper estimates the wage cost of involuntary job loss in South Korea with the Korea Labor and Income Panel Study, 2009- 2023. Involuntarily separated workers lose 6.8 percent of their wage per unit of task distance; the corresponding estimate for voluntary movers is zero.

The penalty is substantially steeper for workers separated from the manufacturing sector, from jobs held for ten years or longer, and from union jobs: three markers of standing accumulated in the origin job.

Workers separated from manufacturing and from long-tenured jobs lose even when they move to higher-paying or more skill-intensive occupations and controlling for destination union status leaves the penalty unchanged: the cost of involuntary separation is neither an occupational downgrade nor the exit from a protected segment, but the destruction of standing, the value of which transfers only to similar work.

Reemployment policy should therefore target support by the origin-job characteristics that predict large losses and weigh task proximity in judging placements.

Keywords: task distance; involuntary job loss; job loss; displacement; job displacement; human capital; specific human capital; wages; manufacturing; manufacturing employment; employment policy; South Korea (search for similar items in EconPapers)
JEL-codes: J24 J31 J62 J63 (search for similar items in EconPapers)
Date: 2026-08-31
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Published in KIET Industrial Economic Review Vol. 31, No. 4

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Persistent link: https://EconPapers.repec.org/RePEc:ris:kieter:023846

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