The IMF crisis which started late in 1997 caused massive unemployment in Korea. The crisis placed a high toll on young workers, especially on those at age between 25 and 29. However, even after the crisis, the high unemployment rate of young workers persisted.
This study addresses the issue of high unemployment of young workers in Korea. It argues that the Human capital theory(Becker, 1975) and Institutional Theory(Coase, 1965; North, 1996) based on the Neo-classical economic perspective can offer only limited explanations on the unemployment of young workers in Korea. But, the New institutionalism Analysis(Granovetter, 1985; Kim Hae-dong, 1995) perspective which focuses on the socio-cultural and institutional aspects provides a better explanation for high unemployment of young workers in Korea.
The recently observed high unemployment of young workers is not a cyclical unemployment, which should wither away if the economy picks up. But, it is a long-term phenomenon, which should be systematically dealt with.
As a solution to deal with the current high unemployment of young workers, the study suggests improvement of the current vocational education and training system. Improving the current vocational education and training system for the young workers is very important in this knowledge based-economy. In particular, we need to improve the system so that it can offer for young workers diverse education and training programs according to their skill levels and updated education and training according to the technological changes;so that young workers can choose education and training programs according to their skill levels, starting from education and training programs for low-level skilled workers and moving to those for highly skilled workers.