Measurement of Unemployment and Extended Unemployment Indicators in Korea

Translated from the article published in the Labor Economic Journal 33(3), 2010 with permission from the Korean Labor Economic Association.This paper explores the causes and solutions of the problem that the official unemployment rate does not adequately represent the reality of employment situation in Korea. First, compared to ILO's international standards, there are several differences in the measurement of unemployment in Korea, for example, the treatment of unpaid family workers working less than 18 hours per week, the classification of persons who are waiting for a new job or temporarily laid-off, and the criteria of job search activities. The questionnaire structure of the Labor Force Survey in Korea also misleads the judgment of economic activity state. Comparing the responses of the basic survey to those of the supplementing survey, approximately 90% of the responses show discrepancies and this indicates the possibility of misclassification. Next, this paper suggests the extended unemployment indicators as alternative, based on the current survey. The extended unemployment indicators support the presence of significant amounts of hidden unemployment and underemployment. And, it is found that the analyses using those indicators are very useful for the investigation of many aspects of employment dynamics