Labor market reform and wage inequality in Korea

Hyeon-Kyeong Kim () and Peter Skott
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Hyeon-Kyeong Kim: Korea Institute for Health and Social Affairs

No 2014-13, UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: Temporary workers make up a sizeable part of the labor force in many countries and typically receive wages that are significantly lower than their permanent counterparts. This paper uses an efficiency wage model to explain the wage gap between temporary and permanent workers. High-performing temporary workers may gain promotion to permanent status, and a high wage to permanent workers therefore serves a dual purpose: it affects the effort of both permanent and temporary workers. Applying the model to the Korean experience, we discuss the effects of the labor market reforms in 1998 on inequality.

Keywords: Temporary workers; inequality; deregulation; efficiency wages; Korea. (search for similar items in EconPapers)
JEL-codes: D33 J31 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-lab and nep-ltv
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