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Hysteresis analysis on labor market of Busan

  • Journal of Regional Studies and Development
  • Abbr : JRSD
  • 2012, 21(2), pp.31-53
  • Publisher : Institute for Poverty Alleviation and International Development: IPAID
  • Research Area : Social Science > Area Studies > Regional Studies in general > Comparative / Statistical Regional Studies

GiSeung Kim 1 조현진 1 Minsoo Jeong 2

1부산대학교
2한국은행

Accredited

ABSTRACT

Despite economic recovery the employment of Busan has not improved since the 2008 financial crisis. This led the local communities to be interested in understanding the causes and searching for the possible resolutions. This study finds out that the hysteresis of labor market in Busan may be the reason for this phenomenon. Hysteresis analysis was carried out using two methods; ADF unit root test and Zivot and Andrews unit root test. Our analysis confirmed that there exists the hysteresis of labor market in Busan. Hysteresis was stronger in more fragile sectors such as manufacturing, SOC, and miscellaneous services. Among the age groups, the hysteresis was stronger for the youth. These findings imply that the recovery in employment is significantly slower than the recovery of the economy in general. In order to avoid the lack of employment due to the hysteresis, the governments should make efforts to persuade the businesses that the lay-off is not the only means to cope with the recession. Also the government should support the transition of jobs between industries as well as the start-up of new businesses. Special policy measures are called for in order to lower the cost of job creations in the process of economic recovery and to provide the proper supports to the long-span unemployed.

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