This study analyzes how recent digital-based technological advances are changing the skill structure of our labor market. Indeed, although it highlights the fact that fears over the possible threat of automation to future jobs are an exaggeration, it is important that such changes are understood and prepared against as they may change the composition of skill contents that jobs require. In addition, this study defines and measures 'job skills' by combining the various skills required for each job based on information from the dictionary of occupational titles, and uses these indicators to demonstrate and analyze the changes in the skill structure of the labor market during the 2008-2018 period. The key findings from the analysis are summarized below.

Firstly, while it is true that the relative demand for cognitive proficiency in the Korean labor market has grown since 2008, the pace has been modest compared to the rapid increase seen in the 1990s, especially in manufacturing. In particular, the recent decline in cognitive skills in professional jobs has raised concerns.

Secondly, by industry, the professional, scientific and technological services (M) and information and communications (J) sectors―which are closely tied to IT technology and considered leaders of the recent technological progress―have seen an improvement in cognitive skills. The same is true for the financial and insurance industries (K) and wholesale and retail sector (G), which are undergoing extensive industrial restructuring with fintech and platform technologies. On the other hand, the public sector saw its level of cognitive skills deteriorate significantly, particularly in the health and social services (Q) and public administration, defense and social security administration (O) sectors. Low-skilling in the public sector is mainly attributed to the rise in policy-driven, low-skilled public jobs.

Third, in terms of gender, occupational segregation still prevails, but the gender gap in cognitive skills is rapidly closing, suggesting that women’s job structure may have improved in terms of labor-market compensation during the analysis period.

And fourth, in terms of education level, the decline in cognitive skills was the greatest among the higher educated, i.e. those with a master’s degree or higher. This suggests that the gap has widened between the general supply-side skill index (worker's education level) and job skills. It also means that the function of education as an investment in human capital is waning.

Fifth, estimations of the returns of each skill type using the wage equation reveal that the yields of physical skills and sensory skills remain flat while the return on cognitive skills stalled and turned downward at its peak in 2013. Decreasing returns of cognitive skills mean that the supply of cognitive skills in the labor market has exceeded demand, which is not very beneficial to innovation activities. Essentially, the possibility cannot be ruled out that the recent advancements in technology may serve to replace certain cognitive skills. However, this effect cannot be discerned in this study, and further research is needed.

Sixth, according to an analysis of the mismatch between worker’s skills and job skills based on education level, nearly half of those in jobs (49.4%) have been classified as overeducated as of 2018―an increase of 7.7 percentage points in 10 years. In addition, the empirical analysis shows that excessive education has a consistently negative effect on wages, meaning that overeducation can cause considerable inefficiencies, not only for individuals, but also for the economy as a whole.

In all, it is clear that the changes in the technological environment have a significant impact on the composition of skills in the Korean labor market, but they are not so linear that they can be simply regarded as cognitive-skill-biased. Rather, the skill structure of the Korean labor market shows that, on the one hand, the cognitive skills of professional occupations have diminished and low-skilling has appeared in the public sector (labor demand), and on the other, that the oversupply of highly educated workers (labor supply) has led to lower returns on skilled labor. It should be noted that this situation is never favorable to technological progress.

Accordingly, policy efforts, such as fostering innovative industries, are needed to increase the number high-skilled jobs. Also, individuals must be encouraged to invest more reasonably in education by providing accurate information about the world of jobs. In particular, active measures should be formulated to establish an education system that is closely linked to the labor market, including adjusting the number of students by college major based on an understanding of the changes in skills requirements in the labor market.

Preface
Executive Summary

Chapter 1 Introduction
　Section 1 Technological Progress and Changes in Labor
　Section 2 Why Skills Again?

Chapter 2 Measuring Job Skills
　Section 1 Data for Analysis
　Section 2 Measuring Job Skills Through Factor Analysis

Chapter 3 Changes in Skill Structure Based on Job Skills
　Section 1 Skill Structure in the Korean Labor Market
　Section 2 Changes in Skill Structure by Industry
　Section 3 Changes in Skill Structure by Worker Characteristics

Chapter 4 Labor Market Analysis Through Job Skills
　Section 1 Returns on Skilled Labor
　Section 2 Education Mismatch

Chapter 5 Summary and Conclusion

References
Appendix
ABSTRACT