This study provides a comparative analysis of the evolution of skill formation systems in Japan and South Korea, considering the nuances in active labour market policies (ALMPs) and institutional transformations in the post-industrial landscape. Both nations initially adopted segmentalist skill formation systems; however, they now exhibit divergent paths. Korea, in particular, has undergone institutional changes from segmentalist to a liberal skill formation system, with firms reducing their involvement in skill formation, resulting in a pronounced skill formation gap. Firms have curtailed their role in skill formation in alignment with environmental changes, and ALMPs have primarily centred on job creation for the elderly and small- and medium-sized enterprise employment subsidies. Conversely, Japan has maintained consistent policy approaches despite similar environmental changes. This study highlights that these divergent trajectories are rooted in the different stages of institutional maturity established during industrialization.
