Policies to tackle labour market duality in Korea

This chapter examines one of the key issues in the Korean policy debates about how to stem the rise in income inequalty: labour market duality. In the context of rapid population ageing and an increasingly difficult school-to-work transition for many youth, strong dualism also threatens to lower the growth potential of the economy. Against this background, the first goal of this chapter is to provide an empirical overview of labour market dualism in Korea and compare the main patterns which emerge with those observed in other OECD countries. This analysis confirms that dualism is unusually strong in Korean and is an important source of earnings inequality and the highest rate of labour turnover in the OECD area. The chapter also identifies effective policy strategies for reducing labour market duality. It argues that well designed policies can reduce the most harmful aspects of duality and thus contribute to stronger and more equitable growth in Korea.