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Changes in Korean Wage Inequality, 1980−2005

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Author Info
Kang, Byung-Goo () (Inha University)
Yun, Myeong-Su () (Tulane University)

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Abstract

Korea is known not only for rapid economic growth but also relatively low wage inequality. It is one of the few countries in which wage inequality decreased during the 1980s, though in recent years wage inequality has increased. This paper studies what factors contributed to the changes in wage inequality during the last two decades. This paper implements a recently developed Oaxaca-type inequality decomposition method to decompose "U" shaped changes in inequality into characteristics (quantity), coefficients (price) and residuals effects at both overall and detailed levels. The results of decomposition analysis show that changes in the wage structure significantly contribute to the changes in wage inequality in Korea. The coefficients effect of human capital factors has played a major role not only in increasing wage inequality from mid-1990s, but also decreasing wage inequality in 1980s and early 1990s.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3780.

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Length: 33 pages
Date of creation: Oct 2008
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Handle: RePEc:iza:izadps:dp3780

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Related research
Keywords: decomposition analysis of inequality; earnings equation; coefficients (price) effect; characteristics (quantity) effect; residuals effect;

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Find related papers by JEL classification:
D30 - Microeconomics - - Distribution - - - General
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gang, Ira N. & Yun, Myeong-Su, 2002. "Decomposing Male Inequality Change in East Germany During Transition," IZA Discussion Papers 579, Institute for the Study of Labor (IZA). [Downloadable!]
  2. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, 06. [Downloadable!] (restricted)
  3. Yun, Myeong-Su, 2004. "Decomposing differences in the first moment," Economics Letters, Elsevier, vol. 82(2), pages 275-280, February. [Downloadable!] (restricted)
    Other versions:
  4. David Neumark, 1987. "Employers' discriminatory behavior and the estimation of wage discrimination," Special Studies Papers 227, Board of Governors of the Federal Reserve System (U.S.).
  5. Thomas Lemieux, 2006. "Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?," American Economic Review, American Economic Association, vol. 96(3), pages 461-498, June. [Downloadable!]
  6. TH Gindling & Juan Diego Trejos, 2005. "Accounting for Changing Earnings Inequality in Costa Rica, 1980--99," The Journal of Development Studies, Taylor and Francis Journals, vol. 41(5), pages 898-926, July. [Downloadable!] (restricted)
  7. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August. [Downloadable!] (restricted)
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  8. Fields, Gary S & Yoo, Gyeongjoon, 2000. "Falling Labor Income Inequality in Korea's Economic Growth: Patterns and Underlying Causes," Review of Income and Wealth, Blackwell Publishing, vol. 46(2), pages 139-59, June.
  9. Rosen, Sherwin, 1997. "Manufactured Inequality," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 189-96, April. [Downloadable!] (restricted)
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  10. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March. [Downloadable!] (restricted)
  11. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June. [Downloadable!] (restricted)
  12. David Card & John E. DiNardo, 2002. "Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," NBER Working Papers 8769, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Yunhee KIM & Jeong-Dong LEE & Almas HESHMATI, 2009. "Analysis of Pay Inequality and its Impacts on Growth and Performance in the Korean Manufacturing Industry," Discussion Papers 200902, Seoul National University, Technology Management, Economics and Policy Program(TEMEP), revised Jan 2009. [Downloadable!]
    Other versions:
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