International Trade and Within-sector Wage Inequality: the Case of South Korea
- International Trade and Within-sector Wage Inequality: the Case of South Korea
- Lee, Siwook
- Issue Date
- Series/Report no.
- KDI School Working Paper Series;WP16-14
- This paper studies which factors contributed to the changes in wage inequality in
Korean manufacturing over the last three decades. By adopting Akerman et al.
(2013)’s decomposition method, we examine the relative importance of withinsector
and between-sector wage variations in Korean manufacturing over the
period of 1980-2012. Our analytic results confirm that within-sector wage variation
explains the lion’s share of overall wage inequality. Taking such finding into
account, we estimate the impacts of international trade, skilled-biased
technological change and labor market conditions on within-sector wage inequality
in Korea. Our estimation results suggest that there was a structural change in
determinants of wage inequality before and after the mid-1990s. The influence of
international trade mainly through heightened import competition on wage
dispersion became relatively more conspicuous over the last two decades.
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