Wage inequality dynamics and trade exposure in South Korea

South Korea has experienced a great U-turn in its inequality trends during the past few decades. In this paper, we explore the role of international trade in its wage inequality dynamics over the period 1998-2012, using a unique labor-related panel dataset. Our analysis reveals that most of the overall wage inequality occurs within sectors and educational groups rather than between sectors and educational groups. Moreover, we document that almost the entire aggregate wage inequality in both manufacturing and services occurs within different trade-exposure categories rather than between them. Finally, we demonstrate that a higher trade exposure in manufacturing is associated with less skill-biased technological change.