ABSTRACT
This chapter examines Korea's employment dynamics during the crisis periods and analyzed how adverse impacts were mitigated this time in comparison with those during the 1997-1998 Asian crisis period. It also explores the importance of the factors using cross-sectional data of 31 Organisation for Economic Co-operation and Development (OECD) countries. They are functions of macroeconomic fluctuations, particularly financial market situations that affect firm bankruptcies and large-scale lay-offs. Policies to mitigate adverse impacts on financial markets should, therefore, be given priority to preserving employment. In this regard, expansionary monetary and fiscal policies to keep aggregate demand from collapsing need to be emphasized once a crisis breaks out. Labor market structures also appear to have affected the sensitivity of employment adjustment in response to a crisis. Finally, temporary policies directly aimed at employment boosting in Korea appear to have been effective in relieving the burden of workers at the margin.
