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Labor market reform and wage inequality in Korea

Author

Listed:
  • Kim, Hyeon-Kyeong

    (Korea Institute for Health and Social Affairs)

  • Skott, Peter

    (The University of Massachusetts at Amherst)

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.

Suggested Citation

  • Kim, Hyeon-Kyeong & Skott, Peter, 2014. "Labor market reform and wage inequality in Korea," UMASS Amherst Economics Working Papers 2014-13, University of Massachusetts Amherst, Department of Economics.
    • Handle: RePEc:ums:papers:2014-13
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    File URL: http://www.umass.edu/economics/publications/2014-13.pdf
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    References listed on IDEAS

    as
    1. Cahuc, Pierre & Postel-Vinay, Fabien, 2002. "Temporary jobs, employment protection and labor market performance," Labour Economics, Elsevier, vol. 9(1), pages 63-91, February.
    2. Cho, Joonmo & Lee, Kyu-Young, 2007. "Deregulation of dismissal law and unjust dismissal in Korea," International Review of Law and Economics, Elsevier, vol. 27(4), pages 409-422, December.
    3. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, vol. 112(480), pages 189-213, June.
    4. Sanghoon Ahn & Kyoji Fukao & Keiko Ito, 2008. "Outsourcing in East Asia and its impact on the Japanese and Korean Labour Markets," OECD Trade Policy Papers 65, OECD Publishing.
    5. Peter Skott & Frederick Guy, 2013. "Power, Luck and Ideology in a Model of Executive Pay," UMASS Amherst Economics Working Papers 2013-01, University of Massachusetts Amherst, Department of Economics.
    6. Gyeongjoon Yoo & Changhui Kang, 2012. "The Effect of Protection of Temporary Workers on Employment Levels: Evidence from the 2007 Reform of South Korea," ILR Review, Cornell University, ILR School, vol. 65(3), pages 578-606, July.
    7. Jai-Joon Hur & Hwan-Joo Seo & Young Soo Lee, 2005. "Information and communication technology diffusion and skill upgrading in Korean industries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(7), pages 553-571.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Temporary workers; inequality; deregulation; efficiency wages; Korea.;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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