Segmented and unequal: evidence on the dual labor market and youth unemployment from the Korea youth survey

ABSTRACT

Empirical studies of the dual labor market, particularly those employing the endogenous switching regression model, are rare, and few studies appear to have considered youth unemployment, which may have negative long-term effects on economic growth and social equality. Using data from South Korea, we test the proposition that the dual structure of the labor market is one of the main causes that make the youth unemployment rate higher and worsens social inequality. The results strongly support the labor market hypothesis, suggesting that the dual market model is more relevant for the youth labor market; the findings also indicate that the social inequality structure may be strengthened by the dual market structure that excludes youth with socially disadvantaged conditions from the primary labor market.

KEYWORDS:

• Dual labor market
• youth unemployment
• social inequality

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1. Neoclassical theorists basing their arguments on Human Capital Theory (Becker, 1964), suggest that job experience and education level are the fundamental causes of the unemployment and wage gap. They have argued that while unemployment may occur due to temporary supply and demand discrepancies in the labor market, it can be resolved through wage adjustments. Thus, from their point of view, long-term involuntary unemployment cannot exist. However, given that the youth unemployment rate has not improved significantly despite the implementation of government policies based on human capital theory over the past decades, skepticism prevails over whether the policy efforts to date have actually worked.

2. The cluster analysis method that several authors used to classify labor markets also had the same problems as the prior two methods (e.g., Anderson et al., 1987; Boston, 1990).

3. If the duration of employment is specified as 1 year or more, the individual is referred to as a ‘typical’ worker, otherwise, ‘temporary’ worker. This distinction is based on the statistical definition used in the ‘Economically Active Population Survey’ conducted by Statistics Korea.

Additional information

Notes on contributors

Yoonpyo Hong

Yoonpyo Hong (first author) currently works for the Evaluation Institute of Regional Public Corporation. His research focuses on public finance, parliamentary budget process, social policy, and administrative leadership.

Kyungeun Lee

Kyungeun Lee (corresponding author) is a research fellow at the Korea Research Institute for Local Administration. Her interests include organizational publicness, policy instruments, performance evaluation, public management, and administrative leadership. She got her Ph.D. from Seoul National University in South Korea. The title of the Ph.D. dissertation is ‘The Impact of Organizational Publicness: Goal Ambiguity, Bureaucratic Structure, and Organizational Performance.’