ANALYSES OF THE RELATIONSHIP BETWEEN EXCHANGE RATES AND EMPLOYMENT IN KOREA

Previous studies about relationship between exchange rates and employment focus on only developed countries. But country characteristics in developing countries are different from those of developed countries. So this paper examines the relationship between two variables using 28 industry data in a developing country, Korea. The results show that generally, Korean employment responds positively to exchange rate shocks. All industries with high openness and low imported input ratio show a positive sign in employment to the shocks. Most industries showing a negative sign in the employment response to the shocks belong to industries with middle or low openness. As expected, Korea employment more responds to exchange rate shock than US employment.