Changes in Korean Wage Inequality, 1980?2005

Byung-Goo Kang () and Myeong-Su Yun ()
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Byung-Goo Kang: Inha University

No 3780, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: decomposition analysis of inequality; earnings equation; coefficients (price) effect; characteristics (quantity) effect; residuals effect (search for similar items in EconPapers)
JEL-codes: D30 J30 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2008-10
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (6)

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