Recent labor market trends in Korea can be characterized by sluggish job creation and increasing segmentation and polarization between regular and non-regular works. But in order to enhance the efficiency of the labor market, coping with rapid structural changes in the economy such as growing importance of service indus-tries and labor saving by technological change, labor market flexibility is essential.

    This study summarizes the related research on the labor market flexibility and polarization, the evolution of labor market flexibility policy and government policy on the labor market to increase labor market flexibility, and an overall increasing inequality in the Korean labor market. In order to analyze whether the short and long run flexibility of the Korean labor market has improved since the currency crisis of 1998, we employ a simple model of relationship between cyclical fluctua-tions in output and unemployment rate. empirical estimates of the coefficients for the short-run flexibility indicate that the short-term flexibility has increased after the currency crisis of 1998 and maintained its trends until the global financial crisis. The coefficient for the persistence of unemployment rate also indicate that the long-term flexibility has improved since the currency crisis but somewhat worsened after the global financial crisis of 2008.