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

Author

Listed:
  • Kim, Yunhee

    (Seoul National University)

  • Lee, Jeong-Dong

    (Seoul National University)

  • Heshmati, Almas

    (Jönköping University)

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.

Suggested Citation

  • Kim, Yunhee & Lee, Jeong-Dong & Heshmati, Almas, 2008. "Analysis of Pay Inequality and its Impacts on Growth and Performance in the Korean Manufacturing Industry," IZA Discussion Papers 3774, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3774
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    Cited by:

    1. Chul-Yong Lee & Jongsu Lee, 2009. "Demand Forecasting in the Early Stage of the Technology's Life Cycle Using Bayesian update," TEMEP Discussion Papers 200903, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Apr 2009.
    2. Jongsu Lee & Chul-Yong Lee, 2009. "A Forecasting Model Incorporating Replacement Purchase: Mobile Handsets in South Korea's Market," TEMEP Discussion Papers 200904, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Apr 2009.
    3. Rui Qu & Sang-Hyun Lee & Zaewoong Rhee & Seung-jong Bae, 2023. "Analysis of Inequality Levels of Industrial Development in Rural Areas through Inequality Indices and Spatial Autocorrelation," Sustainability, MDPI, vol. 15(10), pages 1-17, May.

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    More about this item

    Keywords

    pay inequality; financial crisis; Kuznets Curve; economic growth; performance;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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