NABO Industry Trends and Issues (No. 15)
Published on 17 December 2018
Published by Industry & Employment Analysis Division of the Economic Analysis Bureau
I. Household Income, Real Estate, Financial and Commodities Market Trends
(Household Income) Although the average monthly (nominal) income per household in the 3rd quarter of 2018 has increased by 4.6% (YoY) due to a current income increase, in terms of income distribution level, the bottom 20% reported lower levels of income whereas the top 20% reported higher levels of income, leading to higher income inequality.
(Real Estate) Korean housing sales price volatility (MoM) in November 2018 increased by a lower rate of 0.13%, while apartment sales price volatility (MoM) reversed to a –0.03% decline as nationwide lease prices of commercial real estate showed a declining trend in the 3rd quarter of 2018.
(Financial and Commodities) As risk indicators of the global financial market have risen due to reasons such as US FRB interest rate hikes and the ongoing US-China trade dispute, interest rates and stock prices fell while the value of major currencies against the dollar has weakened. Commodity and agricultural product prices have also exhibited a declining trend due to concerns about a slowdown of the Chinese economy.
Ⅱ. Economic Analysis of Photovoltaic Power Generation
The commercial installed capacity for photovoltaic energy in 2017 was 5.1GW, which is 4.3% of 116.9GW, the total power capacity in Korea. The government plans to expand this capacity to 33.5GW by 2030, to which end it is creating a favorable policy environment for distributing photovoltaic energy. The levelized cost of energy (LCOE) for photovoltaic power in Korea is 121 won per 1kWh without taking into account the price of land, and by 2030 that figure is expected to drop to 84 won. Since the cost of generating photovoltaic energy drops as equipment distribution expands, it is necessary to seek ways to ensure photovoltaic power makes economic sense by increasing the exports of photovoltaic equipment made in Korea, taking advantage of economic of scale, etc.
Ⅲ. Major Examples of Economic Integration and Implications
The first type of economic integration between major economies is economic cooperation through a “two countries, two systems” model, which includes current inter-Korean relations, East and West Germany during the Ostpolitik era and the Economic Cooperation Framework Agreement (ECFA) between mainland China and Taiwan. The second type is economic cooperation (or economic integration) through a “one country, two systems” model, which includes the designation of Hong Kong as a Special Administrative Region (SAR) and the Closer Economic Partnership Arrangement (CEPA) between China and Hong Kong. The third type is economic integration through a “multi-country, one system” model, which includes the European Union (EU) and the Economic and Monetary Union (EMU). The fourth type is forming a single economy through a “one country, one system” model, which includes the unifications of Vietnam, Germany and Yemen. While Germany’s unification was meaningful in that political, economic and social integration took place over a short period of time, the process also suggested that side-effects may occur over the course of a process of rushed economic integration. Moreover, the examples of the EU and the Eurozone imply that goods and production factors need to be integrated through a staged process until the market economy becomes fully mature and the income gap is narrowed.
Ⅳ. Young Adults’Age of First Employment and Marriage
As the age of young adults in Korea at first employment is rising since it takes a longer period of time for them to land a job after graduation, the age at first marriage is also on an upward trend. Upon analyzing the relation between the ages at first employment and first marriage of married young adults, it was found that if the first employment occurs at a younger age, the age at first marriage also decreases. Upon conducting an additional analysis on the relation between the age of young adults at first employment and the characteristics of the workplace at which they are employed, it was found that the average age at first employment was lower if the job offered stable work conditions or the size of the firm was large. Therefore, if more jobs popular among the young adults become available, the age at first employment would likely be reduced, possibly reducing the incidence of late marriages.