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Comment on “Determinants of Labor Market Participation and Wages of North Korean Female Refugees in South Korea” Yukiko FUKAGAWA† Waseda University JEL codes: J21, J31, J61, O15 In recent years, the soaring number of refugees leaving North Korea has enabled various research on the realities of North Korea’s economic society to be undertaken based on questionnaires and surveys starting from Yoon and Kang (1997),Yoon (1999), Ko et al. (2004), Yu et al. (2008), and Haggard and Noland (2007, 2011). In line with this trend, Yu et al. (2012) make a unique contribution by examining the significance of the refugees’ personal contacts especially with South Koreans, and public employment networks in the labor market participation and wage determination for North Korean refugees. First, while many others have studied mainly the level of the refugees’ welfare, Yu et al. (2012) focus on their labor market participation and wage determination, responding to the policy needs to examine the capacity of South Korea to assimilate these refugees. The findings that government support pushes up refugees’ reservation wages, and that training programs are not working positively seem to imply the need for significant policy change, especially taking into account South Korean budgetary constraints in recent years: not only the increasing number of refugees, but also job insecurity among young South Koreans as well as aging have added pressures for social spending. As Yu et al. claim, the relatively large size of the female sample of refugees has research value, but their discus- sions will be further enriched if, they continue to extend their research by excluding the South Korean endogenous constraints for women’s labor participation in general, to pull out the refugee’s unique patterns. In a similar perspective, the research will become more interesting if it is extended to comparative or cross studies between male refugees and South Korean males and the gender differences among refugees. Second, while stressing less effective North Korean channels and South Korean gov- ernment agencies and claiming the significance of “tailor-made” supporting programs, the survey Yu et al. (2012) used probably did not ask why the personal connections worked better, or how it helped in finding jobs. It may be true that historically Korea’s official job placement service has not been powerful, but after all, the government’s information on the market should be limited and there should be a sound division of labor between private and public services. Specific information on the personal channel may help to uncover ideas on how the public and private sectors including NPOs can work together to †Correspondence: Yukiko Fukagawa, Department of Political Science and Economics, Waseda University, 1-6-1, Nishi-Waseda, Shinjuku-ku, Tokyo 169-8050, Japan. Email: [email protected] doi: 10.1111/j.1748-3131.2012.01225.x Asian Economic Policy Review (2012) 7, 130–131 © 2012 The Author Asian Economic Policy Review © 2012 Japan Center for Economic Research 130

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Page 1: Comment on “Determinants of Labor Market Participation and Wages of North Korean Female Refugees in South Korea”

Comment on “Determinants of LaborMarket Participation and Wages of NorthKorean Female Refugees in South Korea”

Yukiko FUKAGAWA†Waseda University

JEL codes: J21, J31, J61, O15

In recent years, the soaring number of refugees leaving North Korea has enabled variousresearch on the realities of North Korea’s economic society to be undertaken based onquestionnaires and surveys starting from Yoon and Kang (1997), Yoon (1999), Ko et al.(2004), Yu et al. (2008), and Haggard and Noland (2007, 2011). In line with thistrend, Yu et al. (2012) make a unique contribution by examining the significance ofthe refugees’ personal contacts especially with South Koreans, and public employmentnetworks in the labor market participation and wage determination for North Koreanrefugees.

First, while many others have studied mainly the level of the refugees’ welfare, Yu et al.(2012) focus on their labor market participation and wage determination, responding tothe policy needs to examine the capacity of South Korea to assimilate these refugees. Thefindings that government support pushes up refugees’ reservation wages, and that trainingprograms are not working positively seem to imply the need for significant policy change,especially taking into account South Korean budgetary constraints in recent years: notonly the increasing number of refugees, but also job insecurity among young SouthKoreans as well as aging have added pressures for social spending. As Yu et al. claim, therelatively large size of the female sample of refugees has research value, but their discus-sions will be further enriched if, they continue to extend their research by excluding theSouth Korean endogenous constraints for women’s labor participation in general, to pullout the refugee’s unique patterns. In a similar perspective, the research will become moreinteresting if it is extended to comparative or cross studies between male refugees andSouth Korean males and the gender differences among refugees.

Second, while stressing less effective North Korean channels and South Korean gov-ernment agencies and claiming the significance of “tailor-made” supporting programs, thesurvey Yu et al. (2012) used probably did not ask why the personal connections workedbetter, or how it helped in finding jobs. It may be true that historically Korea’s official jobplacement service has not been powerful, but after all, the government’s information onthe market should be limited and there should be a sound division of labor betweenprivate and public services. Specific information on the personal channel may help touncover ideas on how the public and private sectors including NPOs can work together to

†Correspondence: Yukiko Fukagawa, Department of Political Science and Economics, Waseda

University, 1-6-1, Nishi-Waseda, Shinjuku-ku, Tokyo 169-8050, Japan. Email: [email protected]

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doi: 10.1111/j.1748-3131.2012.01225.x Asian Economic Policy Review (2012) 7, 130–131

© 2012 The Author

Asian Economic Policy Review © 2012 Japan Center for Economic Research130

Page 2: Comment on “Determinants of Labor Market Participation and Wages of North Korean Female Refugees in South Korea”

help the refugees. Since neither their education in North nor even their training in Southhas turned out to be significant, further investigation will help uncover a better program.

Finally, the unemployment rate in South Korea has remained constantly high to keepthe government busy with policies dedicated for South Koreans for a decade. The naturaland best solution for the refugees depends on making the labor market function better forall the people in the South. Government support may be improved by integrating some ofthe refugees, especially those with longer experience in South, into the comprehensive jobpromoting scheme, and by trying to find out their comparative advantage, or the marketvalue of the refugee workers. The refugees have been dealt with special care, both politi-cally and socially, but their number has already grown probably too large, and they shouldnot be separated especially after Korean business started to hire a large number of NorthKorean workers across the border to build up their experience. Their experiences may addsomething to discussions on how to evaluate the policy towards refugee workers. Follow-ing Yu et al.’s (2012) conclusion, what the government probably can do is to preparesound incentives for the refugees to lower their reservation wage, rather than protectingthem, and for this transition, policy reform will become better if more Korean business,including small and medium size enterprises are involved.

References

Haggard S. & Noland M. (2007). Famine in North Korea: Markets, Aid, and Reform. New York:

Columbia University Press.

Haggard S. & Noland M. (2011). Witness to Transformation: Refugee Insights into North Korea.

Washington, DC: Peterson Institute for International Economics.

Ko S.H., Chung K. & Oh Y.S. (2004). North Korean defectors: Their life and well-being after

defection. Asian Perspective, 28 (2), 101–133.

Yoon D.R. & Kang T.-K. (1997). Conflicts caused by unemployment and income inequality and

policy requirements: Evidence from surveys of North Korean Refugees’ economic activities.

Unification Studies, 1 (2), 169–220.

Yoon I.J. (1999). The state of adjustment of North Korean defectors in South Korean society. Korean

Journal of Sociology, 33 (3), 511–549. (In Korean)

Yu S.-E., Eom J.-S., Eom Y., Deok R. & Jeon W.-T. (2008). Determinants of income level of North

Korean refugees: A seven-year anel study. Unification Policy Studies, 17 (2), 117–153.

Yu S.-E., Kim B.-Y., Jeon W.T. & Jung S.-H. (2012). Determinants of labor market participation and

wages of North Korean female refugees in South Korea. Asian Economic Policy Review, 7 (1),

113–129.

Yukiko Fukagawa Comment

© 2012 The Author

Asian Economic Policy Review © 2012 Japan Center for Economic Research 131