KDI Journal of Economic Policy

June 2012, 2012 KDI Journal of Economic Policy Conference

• Chapter 1Persistent Racial Inequality in the US

  Glenn C. Loury (pp.1-42)

  “I have a dream that one day this nation will rise up and live out the true meaning of its creed: \"We hold these truths to be self-evident: that all men are created equal.\" I have a dream that one day on the red hills of Georgia the sons of former slaves and the sons of former slave owners will be able to sit down together at a table of brotherhood.” (Dr. Martin Luther King, Jr., Washington, DC, 1963) (A fist bump across generations! The ‘fist bump’ is a popular greeting among young African-Americans.)

• Chapter 2사회적 성과 보상

  심상달 (pp.43-64)

• Chapter 3A Trade Triangle among North Korea, South Korea, and China

  Se moon Chang (pp.65-89)

  As hostile as the relation between the two Koreas may seem, the two Koreas have had numerous cooperative relations ever since the Korean War ended on July 27, 1953. Looming on the horizon of these murky relations between the two Koreas has been the dramatic increase in North Korea’s dependence on China as a trading partner since 2001. In 2009, the share of North Korea’s exports to China relative to North Korea’s total exports was 64.7 percent, while the share of North Korea’s imports from China relative to North Korea’s total imports reached 77.5 percent. How the increased dependence of North Korea on China as a trading partner will affect the future relation of the two Koreas is the focus of this paper. The underlying hypothesis of this paper is that the best unification policy for South Korea is to continue to promote bilateral economic relations with China, to stay away from economic sanctions against North Korea, and to convince China of the increasingly burdensome role that North Korea plays to China. The changing trade triangle that increasingly favors South Korea over North Korea is likely to tempt, if not force, China to reconsider its support of North Korea.

• Chapter 4Is Income Growth in the United States Pro-Poor? A State Level Analysis

  Edinaldo Tebaldi ; Jong sung Kim (pp.90-118)

  The impact of economic growth on poverty varies greatly across regions and over time. In this paper, we use data from the Current Population Survey (CPS) and a to-two-point-in-time decomposition proposed by Datt and Ravallion (1992) and Kraay (2006) to assess the extent of the impacts of income growth and income distribution on poverty in each state in the United States. This study finds that between 1992 and 2011, the growth component was the major source of poverty reduction across U.S. states. This result is not sensitive to the measure of poverty (Headcount, Poverty Gap, or Squared Poverty Gap). Regression analysis shows that U.S. states with a larger share of its population with higher education have experienced larger changes in headcount poverty due to income growth rather than changes in income distribution. Export orientation is also found to positively affect the growth component.

• Chapter 5Support System over the Lifecycle: A Cross-Country Comparison

  Sang-Hyop Lee (pp.119-147)

  I describe the complex support systems around the world, focusing on their importance for economic growth and fiscal sustainability. A special attention is paid to Korea vs. other countries. Familial transfers for old age support are somewhat significant in some Asian economies including Korea, although they deteriorate quite rapidly. Public transfer systems are less significant in Korea compared with most OECD member countries. This is important because Korea has had the opportunity to develop sustainable systems less encumbered by obligations made to current and future generations. However, this is changing very rapidly. In particular, the healthcare cost will rise rapidly that is often heavily subsidized by the public sector. There will a growing demand for more public protection either due to economic downturn, population aging, or due to political pressure. How well Korea tackles these challenges will determine whether the country will be able to continue to grow.

• Chapter 6Joblessness among the Highly Educated Youth: The Causes of and Policy Implications

  Yong-seong Kim (pp.148-164)

  Despite strenuous efforts of the government, youth joblessness in Korea has remained as a top policy priority to solve. At this end, this study focuses on the causes of the youth labor market problems and tries to search for policy directions. While the previous research attempted to explain youth joblessness based on the labor demand and supply framework, this study applies a job search model which emphasize a job matching process. A theoretical model and empirical results predict that a mean duration of unemployment could decrease if an implicit income of unemployment declines or a rate of job offer rises. From policy point of view, raising incentives for labor demand and strengthening employment services are suggested because a policy to lower an implicit income of unemployment may not secure policy target efficiency.

• Chapter 7‘연줄’인가, ‘연결’인가? 인적 네트워크의 노동시장 효과 분석

  김영철 (pp.165-224)

  본 논문은 한국노동패널(KLIPS) 자료를 활용하여 국내 노동시장에서의 인적 네트워크 활용의 효과성을 검증하고 임금근로자 개인의 구직 네트워크 가치를 추정하였다. 흔히 인적 네트워크를 활용한 이직을 ‘연줄’ 혹은 ‘정실 인사’라고 하여 부정적으로 보는 견해가 많으나, 본 연구는 인적 네트워크가 이직자와 구인자 사이의 정보전달 기능을 수행함으로써 사회 전반의 일자리 매치(Job Match)의 적합성을 증대시키는 긍정적 기능을 수행하고 있음을 입증하고 있다. Propensity Score Matching 방법론을 활용하여 검증한 결과, 자발적 이직자들의 이직을 네트워크형 이직과 비네트워크형 이직으로 구분하여 보았을 때, 네트워크형 이직만이 교육수준 및 기술수준의 적합도를 각기 (100점 만점에서) 2.13점과 2.52점만큼 개선시키는 것으로 확인되었으며, 이러한 적합도의 개선은 월 4.074만원(2010년 기준)의 임금상승효과로도 재확인되었다. 덧붙여, 이를 활용하여 임금근로자 개인의 구직 네트워크의 가치를 추정해 보면, 구직 네트워크의 생애 금전적 가치는 1,872.0만원으로 집계되었으며, 여기에 주관적 만족도에 대한 보상 측면까지 고려하면, 만족도1점의 현금가치를 n만원으로 환산할 때, 대략 (1872.0+758.2n)만원에 이르는 것으로 집계되었다.

• Chapter 8노인의료비 지출 분석

  정완교 (pp.225-249)

  Rising medical costs due to aging population have been a growing concern to both elderly households and the National Health Insurance(NHI). While previous research is preoccupied with forecasting medical costs under the assumption of constant or constantly rising age-medical cost profile, this paper analyzes the medical cost of the elderly taking account of “end-of-life” medical cost, the more important factor affecting their medical costs. Among the results, the medical cost for the elderly has increased significantly since 1999 to represent 31.58% of the total NHI cost in 2009. Simultaneously, the medical cost for the poor elderly under the Medical Aid Program increased to 41.4% of its total cost in 2009. Increased use of medical care, especially inpatient care, is shown to have contributed significantly to these results. Furthermore, the distribution of medical cost is skewed to the right for the elderly and spreads out as their age increases. In addition, the medical cost during the last year of life is significantly high but declines with age at death. These results mean that for the sake of better health policy on rising medical costs with aging population, both distribution of medical cost and “end-of-life” medical cost should be taken into consideration together with such factors as income, health status, and health insurance coverage.

• Chapter 9The Role of Foreign Banks in Monetary Policy Transmission: Evidence from Asia during the Crisis of 2008-09

  Bang Nam Jeon ; Ji Wu (pp.250-297)

  Since the 1997-8 Asian financial crisis, the level of foreign bank penetration has increased steadily in Asian banking markets. This paper examines the impact of foreign banks on the monetary policy transmission mechanism in emerging Asian economies during the period from 2000 to 2009, with a specific focus on the global financial crisis of 2008-9. We present consistent evidence that on the whole, an increase in foreign bank penetration weakened the effectiveness of the monetary policy transmission mechanism in the host emerging Asian countries during crisis periods. We also investigate various conditions and environments, including the type of monetary policy shocks, the severity of shocks upon parent banks in global crisis, the dependence of parent banks on the wholesale funding market, country of origin of foreign banks, and entry modes, under which the effectiveness of monetary policy transmission is reduced more severely due to the increasing presence of foreign banks in the emerging Asian banking markets.

• Chapter 10금융위기의 고용파급효과에 대한 실증분석

  신석하 ; 조동철 (pp.298-324)

  본 연구는 금융위기가 고용 및 실업에 미친 영향을 분석하였다. 특히 이번 금융위기 동안의 고용조정이 외환위기 당시나 여타 선진국의 경험과 비교하여 매우 완만하게 나타난 원인이 무엇이었는지에 분석의 초점을 맞추었다. 오차수정모형을 이용하여 분석한 결과, 최근의 금융위기 기간 동안 고용 조정이 외환위기에 비해 완만했던 일차적 원인은 성장률의 하락폭이 상대적으로 작았던 데 기인한 것으로 나타났다. 이 외에도 외환위기와 달리 이전에 누적되었던 과잉고용의 부담이 거의 없었다는 점과, 수요구성 측면에서 수출수요에 비해 고용민감도가 높은 국내수요가 금융위기 기간 동안에는 어느 정도 유지되었다는 점도 추가적인 완화 요인으로 작용하였던 것으로 보인다. 특히 외환위기와 달리 대규모 연쇄부도를 초래할 정도의 금융경색이 발생하지 않았다는 점이 최근의 완만한 고용조정을 설명할 수 있는 주요 요인이었던 것으로 나타났다. 이와 같은 현상은 OECD 국가를 대상으로 한 분석에서도 관측되었다. 이러한 분석 결과는 경제위기 시 고용의 급격한 위축을 방지하기 위해서, 우선적으로 성장률의 급변동을 완화하는 거시경제운용, 금융경색을 방지하기 위한 금융기관 및 기업의 재무건전성 유지, 내수의 안정적 유지 및 ‘과잉고용’ 누적 방지를 위한 정책적 노력이 중요함을 시사한다.

• Chapter 11Asymmetric Loss in the Greenbook and the Survey of Professional Forecasters

  Yiyao Wang ; Tae-Hwy Lee (pp.325-351)

  This paper examines rationality of forecasts of the Greenbook and the Survey of Professional Forecasters (SPF) under asymmetric loss functions, using the method proposed by Elliott, Ko-munjer and Timmermann (2005) with a rolling window strategy. We find that (1) the degree and direction of the asymmetry are time-varying over the rolling windows, (2) rationality of forecasts of output growth and inflation is not rejected under asymmetric loss over nearly all rolling windows, (3) real output growth is consistently underpredicted in 1990s and the inflation rate is consistently overpredicted in 1980s and 1990s, (4) inflation forecast generally exhibits a greater asymmetric level in magnitude and frequency than output growth forecast, (5) long horizon inflation forecasts generally exhibit greater asymmetric loss compared to short horizon inflation forecasts, and (6) all these results similarly hold in the Greenbook forecasts and the SPF forecasts.

• Chapter 12Uncertainty, Fear, and Liquidity

  Kee H. Chung ; Chairat Chuwonganan (pp.352-399)

  In this study we show that uncertainty and fear (measured by VIX) exert a market-wide impact on liquidity which gives rise to comovements in individual asset liquidity. Uncertainty and fear exert a larger impact on liquidity when public traders play a greater role and/or market makers play a smaller role in liquidity provision. High volatility in asset prices and large fluctuations in liquidity in recent years (e.g., the Flash Crash in 2010) may be due, at least in part, to the reduced role of market makers and the increased role of high-frequency traders. Overall, our results are consistent with the supply-side theory of liquidity commonality.