{
  "title": "Advancing Labor Market Reforms in Korea",
  "publication": "IMF Working Papers, August 23, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2024/08/23/advancing-labor-market-reforms-in-korea-553978",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2024/08/23/advancing-labor-market-reforms-in-korea-553978",
  "overlayPath": "/en/publications/wp/issues/2024/08/23/advancing-labor-market-reforms-in-korea-553978/index.md",
  "summary": "This paper examines structural challenges facing the Korean labor market and analyzes the macroeconomic effects of potential labor market reforms.",
  "sections": [
    {
      "heading": "Summary findings",
      "content": "- The paper examines structural challenges facing the Korean labor market and analyzes the macroeconomic effects of potential labor market reforms.\n- Cross-country empirical analysis finds that easing of employment protection legislation tends to have positive macroeconmic effects during periods of strong growth but could turn contractionary in periods of slack.\n- Increased spending on active labor market policies and reductions to the labor tax wedge tend to be more effective in periods of slack.\n- The analysis highlights the importance of considering economic and policy conditions when designing labor market reforms.\n- Under the current disinflationary policy stance, the government’s focus on the working hour reform seems appriorate.\n- With growth recovering, deregulation to reduce employment protection for regular workers can be considered, combined with targeted support to vulnerable groups."
    },
    {
      "heading": "Empirical analysis and scenarios",
      "content": "- Cross-country empirical approach used to assess macroeconomic effects of different reform types.\n- Reform-type effects by economic condition:\n  - Easing employment protection legislation:\n    - Positive macroeconomic effects during periods of strong growth.\n    - Could turn contractionary in periods of slack.\n  - Increased spending on active labor market policies:\n    - More effective in periods of slack.\n  - Reductions to the labor tax wedge:\n    - More effective in periods of slack.\n- Policy design implication: Effectiveness of reforms depends on interaction with the economic cycle and prevailing policy stance."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Short-run/near-term:\n  - Given the current disinflationary policy stance, prioritize the working hour reform.\n- Medium-term/conditional on growth recovery:\n  - Consider deregulation to reduce employment protection for regular workers.\n  - Combine deregulation with targeted support to vulnerable groups.\n- Overall:\n  - Design reform packages that account for economic and policy conditions, tailoring measures (e.g., employment protection easing, active labor market spending, tax wedge reductions) to whether the economy is in a growth phase or slack."
    },
    {
      "heading": "Key statistics and publication identifiers",
      "content": "- Authors: Stella Tam, Xin Cindy Xu\n- Date: August 23, 2024\n- Pages: 25\n- Volume: 2024\n- Issue: 183\n- Series: Working Paper No. 2024/183\n- DOI: https://doi.org/10.5089/9798400289026.001\n- Stock No: WPIEA2024183\n- ISBN: 9798400289026\n- ISSN: 1018-5941\n- Preview citation line included in source: Stella Tam, and Xin Cindy Xu. \"Advancing Labor Market Reforms in Korea\", IMF Working Papers 2024, 183 (2024), accessed 9/11/2026, https://doi.org/10.5089/9798400289026.001\n\nIMF Working Papers: Advancing Labor Market Reforms in Korea\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2024/08/23/advancing-labor-market-reforms-in-korea-553978"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2024/08/23/advancing-labor-market-reforms-in-korea-553978/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2024/08/23/advancing-labor-market-reforms-in-korea-553978/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2024/08/23/advancing-labor-market-reforms-in-korea-553978/bundle-manifest.json)",
    "Authors: Stella Tam, Xin Cindy Xu",
    "Published: August 23, 2024",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400289026.001",
    "The paper examines structural challenges facing the Korean labor market and analyzes the macroeconomic effects of potential labor market reforms.",
    "Cross-country empirical analysis finds that easing of employment protection legislation tends to have positive macroeconmic effects during periods of strong growth but could turn contractionary in periods of slack.",
    "Increased spending on active labor market policies and reductions to the labor tax wedge tend to be more effective in periods of slack.",
    "The analysis highlights the importance of considering economic and policy conditions when designing labor market reforms.",
    "Under the current disinflationary policy stance, the government’s focus on the working hour reform seems appriorate.",
    "With growth recovering, deregulation to reduce employment protection for regular workers can be considered, combined with targeted support to vulnerable groups.",
    "Cross-country empirical approach used to assess macroeconomic effects of different reform types.",
    "Reform-type effects by economic condition:",
    "Policy design implication: Effectiveness of reforms depends on interaction with the economic cycle and prevailing policy stance.",
    "Short-run/near-term:",
    "Medium-term/conditional on growth recovery:",
    "Overall:",
    "Authors: Stella Tam, Xin Cindy Xu",
    "Date: August 23, 2024",
    "Pages: 25",
    "Volume: 2024",
    "Issue: 183",
    "Series: Working Paper No. 2024/183",
    "DOI: https://doi.org/10.5089/9798400289026.001",
    "Stock No: WPIEA2024183",
    "ISBN: 9798400289026",
    "ISSN: 1018-5941",
    "Preview citation line included in source: Stella Tam, and Xin Cindy Xu. \"Advancing Labor Market Reforms in Korea\", IMF Working Papers 2024, 183 (2024), accessed 9/11/2026, https://doi.org/10.5089/9798400289026.001",
    "**Working Paper**"
  ],
  "related": [
    {
      "title": "Working Paper",
      "role": "paper",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2024/english/wpiea2024183.pdf",
      "summary": {
        "path": "/-/media/files/publications/wp/2024/english/wpiea2024183.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/wp/2024/english/wpiea2024183.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2024/08/23/advancing-labor-market-reforms-in-korea-553978/index.md",
    "json": "/en/publications/wp/issues/2024/08/23/advancing-labor-market-reforms-in-korea-553978/index.json",
    "bundleManifest": "/en/publications/wp/issues/2024/08/23/advancing-labor-market-reforms-in-korea-553978/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-17T00:33:14.826Z"
}