Effect of Exchange-Rate Uncertainty on Labor Market Based on the Grey Relational Analysis

Abstract

This paper investigates the impacts between exchange-rate uncertainty and unemployment rate during pre- and post-crisis periods and examines the relationship within Asian region, including South Korea, Singapore, Hong Kong and Taiwan. According to the results, GRA has a higher relation than the linear regression with restrictive lag structures model does. The relationship between exchange-rate uncertainty and unemployment rate are high mutually dependent during the pre-crisis period in Taiwan, and South Korea. On the contrary, the relation in Taiwan becomes less dependent during the post-crisis period. The exchange-rate uncertainty has a significant impact on the unemployment rate in Taiwan and South Korea during the pre-crisis period. However, the exchange-rate uncertainty has a significant impact on the unemployment in South Korea during the post-crisis period but it has insignificant impacts on that in others countries during the post-crisis period. Furthermore, the exchange-rate uncertainty is mutually dependent between Taiwan and South Korea during the pre- and post-crisis.