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Analysis of Pay Inequality and its Impacts on Growth and Performance in the Korean Manufacturing Industry

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  • Yunhee Kim
  • Jeong-Dong Lee
  • Almas Heshmati

    ()
    (Technology Management, Economics and Policy Program(TEMEP), Seoul National University)

Abstract

This paper examines the relationship between pay inequality, economic growth,and performance in Korea. Pay inequality is estimated by using Theil¡¯s index to identify the factors determining the level of pay inequality, and establish its relationship with economic growth and performance. For the empirical results we use panel data on the Korean manufacturing sector for the period 1993 to 2003. It appears that a large portion of rising pay inequality can be attributed to rising relative pay among the small-sized firms, outside the capital city area and in the ICT sectors which were affected by the economic structural reform since 1997. The findings support the hypothesis of an ¡°augmented¡± Kuznets Curve, according to which certain developed countries are found on an upward-sloping addendum to the original formulation of Kuznets.

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Bibliographic Info

Paper provided by Seoul National University; Technology Management, Economics, and Policy Program (TEMEP) in its series TEMEP Discussion Papers with number 200902.

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Length: 28 pages
Date of creation: Jan 2009
Date of revision: Jan 2009
Handle: RePEc:snv:dp2009:200902

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Keywords: Pay Inequality; Financial Crisis; Kuznets Curve; Economic Growth; Performance;

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  1. Gregory, Gary & Harvie, Charles & Lee, Hyun-Hoon, 2002. "Korean SMEs in the Wake of the Financial Crisis: Strategies, Constraints and Performance in a Global Economy," Economics Working Papers, School of Economics, University of Wollongong, NSW, Australia wp02-12, School of Economics, University of Wollongong, NSW, Australia.
  2. Oh, Inha & Heshmati, Almas & Baek, Chulwoo & Lee, Jeong-Dong, 2006. "Comparative Analysis of Firm Dynamics by Size: Korean Manufacturing," Ratio Working Papers, The Ratio Institute 94, The Ratio Institute.
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  4. Benabou, R., 1996. "Inequality and Growth," Working Papers, C.V. Starr Center for Applied Economics, New York University 96-22, C.V. Starr Center for Applied Economics, New York University.
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  6. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, American Economic Association, vol. 82(3), pages 371-92, June.
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  14. Heshmati, Almas, 2004. "Inequalities and Their Measurement," IZA Discussion Papers 1219, Institute for the Study of Labor (IZA).
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  19. Fields, Gary S & Yoo, Gyeongjoon, 2000. "Falling Labor Income Inequality in Korea's Economic Growth: Patterns and Underlying Causes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 139-59, June.
  20. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, Elsevier, vol. 57(2), pages 259-287.
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Cited by:
  1. Chul-Yong Lee & Jongsu Lee, 2009. "Demand Forecasting in the Early Stage of the Technology's Life Cycle Using Bayesian update," TEMEP Discussion Papers, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP) 200903, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Apr 2009.
  2. Jongsu Lee & Chul-Yong Lee, 2009. "A Forecasting Model Incorporating Replacement Purchase: Mobile Handsets in South Korea's Market," TEMEP Discussion Papers, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP) 200904, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Apr 2009.

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