• Journal of the Korea Academia-Industrial cooperation Society
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• v.20 no.2
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• pp.153-159
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• 2019

Job creation is the most important issue in the labor market these days, and the quality of jobs is also very important in order to resolve the mismatches that are taking place in the labor market. Kim Young-min (2014) developed the "2012 Quality of Employment Index" with twenty indicators in seven categories, including employment opportunities, to objectively assess the local labor market. This method presents the concept of the aggregate indicator, 'Quality of Work Index', and has the advantage of being easy to produce. However, it is difficult to statistically verify the adequacy of the constitutive indicators and, based on this, make them a single aggregate index through statistical techniques. Therefore, we developed an alternative '2012 Descent Work Index' and a confidence interval using Principal Component Analysis(PCA) and Unobserved Component Model(UCM) presented by Gi-Choon Kang & Myung-jig Kim (2014) and also calculated an alternative '2017 Descent Work Index' using the first half of 2017 local area labour force survey and compared its changes by region. The results of the empirical analysis show that the rank correlation coefficient between two methods of aggregating indicators, simple weight used in Young-min Kim's research, PCA method and UCM used in this study, were found to be statistically significant under 5% significance level. This implies that all methods are found to be useful. However, the PCA and UCM which determine scientific and objective weights based on data are preferred to Young-min Kim's approach. Since it provides us not only the level of aggregate indicator but also its confidence intervals, it is possible to compare ranking with the consideration of statistical significance. Therefore, it is expected that the method of constructing an aggregating indicator using UCM will be widely used in many areas in the future.