Can Innovation City Policy Alleviate Skill Mismatch and its Wage Effects? Evidence from Korean Labor Market
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Hanol Lee
und
Sungjae Oh
Abstract
Under Korea’s Innovation City Policy, public institutions in Seoul were relocated to provincial regions to address regional imbalances. These institutions were required to meet specific local talent hiring quotas for their new recruitment. Using difference-in-differences analysis with individual-level data from 2010 to 2019, we compare labor market outcomes between graduates from top-ranked provincial universities and those from Seoul-based universities. The policy significantly reduced skill mismatch for provincial graduates; however, this effect was concentrated among humanities and social science (HSS) graduates and female graduates, while science, technology, engineering and mathematics (STEM) graduates and male graduates saw no improvement. The wage penalties associated with skill mismatch remained same after implementation, especially for HSS graduates but worsened for STEM graduates. This disparity stems from the policy generating primarily administrative positions well-suited to HSS graduates’ transferable skills, while failing to create sufficient STEM-related jobs, forcing these graduates into positions unrelated to their academic field.
Acknowledgments
We are grateful to the editor and two anonymous reviewers for their thoughtful and constructive feedback, which substantially improved the quality of this manuscript.
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Competing interests: None.
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Research funding: This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.
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Data availability: The Graduate Occupational Mobility Survey can be accessed publicly through the Korea Employment Information Service (https://survey.keis.or.kr/goms/goms01.jsp). However, details on respondents’ academic affiliations are provided by the Korea Employment Information Service only upon formal request.
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