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22 Governance: An Int'l J. Pol'y, Admin, & Institutions 1 (2009)

handle is hein.journals/gvnanlj22 and id is 1 raw text is: Regulatory Contradictions: The Political Determinants of Labor Market Inequality in Korea and Japan JI-WHAN YUN* Growing labor market inequality in Korea and Japan is often blamed on increased trade competition with China, the information technology revo- lution, and aging populations. This study shows that labor market inequal- ity is not simply driven by such structural changes but by the nature of the ways in which new labor market regulations were created and the resulting regulatory contradictions. Although its state-centric strategies designed new labor market regulation favoring marginal workers, the Korean gov- ernment failed to resolve labor market inequality. This is because the gov- ernment's new regulatory goal was not backed by sufficient policy resources or adequately coordinated with other policy areas. Conversely, Japanese authorities prioritized the employment stability of regular workers on the basis of consensus among labor and business groups and the government. However, this narrow goal continues to inhibit progress in closing the gap of labor market inequality. Introduction South Korea (hereafter, Korea) and Japan share the serious problem of social inequality. Following the 1997 financial crisis, Korea failed to restore the low level of social inequality that it had achieved in prior decades. Differences in income, wealth, and education have led to unprecedented social polarization, a situation that is called Yanggeukhwa by Koreans. Japan has faced a similar experience. Soon after emerging from the lost decade of the 1990s, Japan pioneered the greatest expansion in its postwar history. However, economic disparities widened the gap between generations, occupations, and regions. Japan, like Korea, has moved from a 100-million middle-class society to the Kakusa Shakai (society of gaps). The seriousness of inequality is no exaggeration. Korea and Japan are among the four Organisation for Economic Co-operation and Develop- ment (OECD) members, along with the United Kingdom and New Zealand, whose social inequality problem has strikingly worsened in recent years. Gini coefficients1 for Korea and Japan measured below the *University of California, Berkeley Governance: An International Journal of Policy, Administration, and Institutions, Vol. 22, No. 1, January 2009 (pp. 1-25). © 2009 The Author Journal compilation © 2009 Wiley Periodicals, Inc., 350 Main St., Malden, MA 02148, USA, and 9600 Garsington Road, Oxford, OX4 2DQ, UK. ISSN 0952-1895