Proceedings of 10th Asia - Pacific Business and Humanities Conference
22 - 23 February 2016, Hotel Istana, Kuala Lumpur, Malaysia
ISBN: 978-1-925488-00-5
The Relationship between Local Employment and Regional
Economic Growth: The Case of Korea
Jihye Choi* and Iltae Kim**
Korea has been entered recession and high unemployment state after the global finance
crisis. In addition, the job creation is one of the main issues of national economic policy and
regional economic policy in Korea for escape from recession. Therefore the capture of
relationship between employment growth and economic growth is important in the Korean
local economy.
This paper examines the Long-Run equilibrium relationship between local employment and
regional economic growth through the FMOLS(Fully Modified Ordinary Least Squares)
method and uses the panel data of 16 regions from 1995 to 2013 in Korea.
This paper shows the existence of Long-Run equilibrium in terms of Panel Cointegration
relationships between the employment and economic growth which have the unit root.
Moreover, this investigates if the relationship deviate from the equilibrium then error correction
term converges to the Long-Run equilibrium. In the situation where the non-regular
employees increase, this result suggests that local employment extension should be
considered seriously for regional economic growth in Korea. Also, stable employment
extension policy is important for the long term.
JEL Codes: R11, R50 and R58
*Jihye Choi, Ph.D student, Department of Economics, Chonnam National University, South Korea.
Email : iamwise_7@naver.com, Tel: +82-10-2987-6830.
**Dr. Iltae Kim, Department of Economics, Chonnam National University, South Korea. Email: kit2603@jnu.ac.kr.
Tel: +82-10-4198-1401.