Job creation for the youth population has been a part of the Korean government’s top priority agenda for almost twenty years. Nevertheless, there still does not exist a consistent policy direction nor an agreed-upon diagnosis of the problem. This report takes an empirical approach and analyzes all data sets available to identify the causes of youth employment drop since the 2000s. The employment rate, i.e. the employment to population ratio, has dropped most conspicuously among young men aged between 25 and 29. In comparison, the fall has been more moderate for those in the 30 to 34 age group as well as for young women. On the other hand, the quality of job, including real wages, for young workers have significantly improved during the period. For this reason, this report focuses on young men aged between 25 and 29 and brings to light the rapid drop in their employment rate.

To summarize, the drop mirrors the rise in age at completion of final stage education. The employment rate among young men prior to this stage remains at around 50 percent while hazard model estimation results show that the transition periods from graduation to first-time employment have not become longer as well. Consequently, the overall average employment rate falls. The rise in age at graduation is mainly concentrated in the middle group. More of them attain college education while staying outside the labor market longer. As of 2016, half of all young men have bachelor’s degrees or more.

The result poses two questions. The first is, why do these young men seek higher education when they do not acquire professional positions? And second is based on the observation that continually rising age at graduation means corresponding reduction in the supply of graduates to the year’s job market. The market is different from that for students. In fact, the average age at graduation rose by 0.13 years every year on average during the last fourteen years, maintaining the supply by 13 percent lower than the cohort population size. The effect is much more substantial than that of the population size reduction, which gauges in at just one percent per year. Indeed, a reduced supply of graduates means a reduced number of jobs created for them. So, what has caused the decline in jobs?

Production jobs have decreased rapidly for young male high school graduates. As their selection for jobs narrows, many of them have chosen to acquire additional education. Among college graduates, despite the increase in numbers of graduates, professional jobs and clerical jobs have not increased. In clerical jobs, the total number has decreased, and it becomes harder for the less educated to get clerical positions. The general pattern of job creation for the youth indicates the effects of technological shift. The burden of the shift is borne by the youth population and further, the total number of jobs for them is decreasing. The response has been to acquire additional higher education in order to raise their chances of obtaining the positions. During this process, the supply is reduced, securing an equilibrium under the circumstance.

The trend of clerical jobs in the economy by age and gender groups is very confusing in labor force survey data. This report avails itself of the Employment Insurance System database and shows clearly that clerical job openings, which were on an upward swing until the mid 2000s, have reversed past trends and are on the decline. Clerical jobs serve as a port of entry for the young. In the past, many entered the labor market as clerical workers, obtaining knowledge about the business world and moving onto other occupations or self-employment. Now, clerical workers tend to stay in their positions longer and new openings have decreased.

Business growth dynamism refers to the vigor of job creation and destruction. According to the Census of Establishments panel data, job creation and destruction rates have been on a generally declining trend since the early 2000s. The fall is most evident in the private corporate sector due to declining job creation by startup firms while in the sole proprietorship sector, the fall has been very mild. Firm entries have been active in the early 2000s, in electronics, retailing, and business services, but there has been an overall downward trend ever since. Jobs are created by young firms in their growing stages. As these startups mature, business growth dynamism also stagnates. Since the Census of Establishments does not contain information on individual workers, we use the Employment Insurance System database to find out its effects on youth jobs. Shares of young workers are higher in young firms but the difference with older firms is small and narrowing. Young firms contribute to youth jobs via their active job creation and not by their preference for younger workers.

Preface
Executive Summary

Chapter 1 Introduction

Chapter 2 Transition Process of Youth into Employment
　Section 1 Current Status and Issues in Youth Employment
　Section 2 Transition Process of Young Workers into Employment
　Section 3 Hazard Analysis of the Employment Transition Process
　Section 4 Occupational Structure of Young Graduates from Their Final Educational Stage
　Section 5 Conclusion

Chapter 3 Decline in Business Growth Dynamism
　Section 1 Youth Employment and Business Growth Dynamism
　Section 2 Census of Establishments Panel Data
　Section 3 Trends in Job Creation and Destruction
　Section 4 Job Creation by Establishment and Firm Age
　Section 5 Conclusion

Chapter 4 Business Growth and Youth Employment
　Section 1 Characteristics of the Employment Insurance Database
　Section 2 Current Status of Wage Employment Among Youth
　Section 3 Firm Age and Youth Employment
　Section 4 Conclusion

Chapter 5 Conclusion

References
ABSTRACT