Contents

International Trade and Within-sector Wage Inequality: the Case of south Korea

Lee, Si Wook

Abstract

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 within-sector 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.

Issue Date
2016-10
Publisher
KDI School of Public Policy and Management
Pages
36
Series Title
KDI School Working Paper 16-14
DOI
10.2139/ssrn.2850785
Language
ENG
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