KWDI Korean Women’s Development Institute

Unemployment rates increased sharply during the financial crisis at the end of 1990s in Korea, which activated related researches on unemployment. But there have been few works on gender gaps in unemployment rates, partially because women’s unemployment rate continues to be lower than men' rate. This paper attempts to observe the trend of women’s unemployment rate since the year of 2000 and analyse why this gender gap in unemployment rates exists. The unemployment rate is a measure of underutilized labour supply and can be defined in many ways. ILO defines the unemployed as the persons who are without work, available to work and actively seeking work. This definition tends to underestimate the scale of women unemployed. Many women want to work but do not actively seek work, thus they are not counted as the unemployed. Korean women are no exception. Considering the limitations in the official indicator of unemployment rate, this paper suggests an alternative indicator to include time-related underemployed, discouraged workers and other inactives available for work. Official women’s unemployment rate was 3.1 percent in 2011, lower than men’s 3.6 percent. When applying the new indicator, women’s unemployment rate increased to 7.4 percent in 2011, which was higher than men’s rate (7.2 percent). This new alternative indicator corresponds to the cyclic fluctuations and provides much information about labour underutilization. Analyzing hazard rates and multinomial logit models with the data of “Korean Labor and Income Panel Studies”, this study confirmed that women tended to exit employment spells to non-employment spells rather than to unemployment spells. When reentering the labor market, women tended to enter the labor market directly without the stage of seeking jobs. Korea is confronted with a high need to utilize potential labor force fully with low fertility and rapid ageing. This adds one more reason for developing new informative indicator to show labor underutilization. This paper confirms strongly that present official unemployment rate underestimates especially women’s underutilization, thus new indicator such as “alternative unemployment rate” which this paper suggested should be developed.