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

Yunhee Kim (), Jeong-Dong Lee () and Almas Heshmati ()

No 200902, TEMEP Discussion Papers from Seoul National University; Technology Management, Economics, and Policy Program (TEMEP)

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.

Keywords: Pay Inequality; Financial Crisis; Kuznets Curve; Economic Growth; Performance (search for similar items in EconPapers)
JEL-codes: C43 J31 J38 O4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fdg
Date: 2009-01, Revised 2009-01
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