Wednesday, November 14, 2012

South Korea's Extremely Low Unemployment For The Least Educated

South Korea's seasonally adjusted unemployment rate fell to a new low of 3.0% (the unadjusted rate was 2.8%) even as the participation rate rose as employment rose by 1.6% during the latest year.

One interesting detail is that in South Korea, a higher education level is actually associated with a higher unemployment rate, as the equivalent of high school drop outs had an unemployment rate of  only 1.8%, those with the equivalent of only a high school diploma had an unemployment rate of 3% and those who had attended the equivalent of college or university had a 3.1% unemployment rate.

By contrast in the U.S. high school drop outs had a 12.3% unemployment rate, those with only high school diploma had an unemployment rate of 8.4%, those who attended college but didn't get a degree had an unemployment rate of 6.9% and those with college degrees an unemployment rate of 3.8%.

Exactly why the unemployment pattern differ so much between the U.S. and South Korea isn't entirely clear, but two possible explanations include that the much greater overall strength of the Korean labor market probably disproportionately benefits those with less education and that U.S. employers views formal education as a more important selection criteria when choosing whom to hire than Korean employers do.