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Wage inequality and the efficiency of workers in Korea : 1965-2007

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Frame of Image s working paper. I am grateful anonymous referees from the Macroeconomic Studies Team of the Institute for Monetary & Economic Research, the Bank of Korea. This paper is completed while I was a visiting professor of the Institute. The views expressed are not necessarily those of the Institute and the Bank of Korea.
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Contents
1. Introduction······································································1 2. Production Sector Framework··················································3
2.1 Econometric Specification·······················································7 2.2 Empirical Results ·······························································9 2.2.1 The economy-wide national account data in Korea ·························9 2.2.2 Household Income Distribution Data ······································15 2.2.3 Policy Implications ·······················································17
3. Efficiency of Labor ·····························································17
3.1 Computation of the Efficiencies·················································18
4. Conclusions······································································20 Table 1: Wage Inequality, ln(Ws/Wu) ----------------------------------------22 Table 2: Changes in the Wage Inequality and the Relative Supply and Demand for Skilled Workers, 1965-2007 --------------------------22 Table 3: The Distribution of Wage Earnings------------------------------------23 Table 4: The Ratio to GDP V


Full Text
Title Wage inequality and the efficiency of workers in Korea
Similar Titles
Sub Title

1965-2007

Material Type Reports
Author(English)

Kwack, Sung Yeung

Publisher

[Seoul]:The Bank of Korea(Institute for Monetary and Economic Research)

Date 2010-10
Series Title; No Working Paper / no. 437
Pages 54
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Social Development < Employment
Holding The Bank of Korea; KDI School

Abstract

Wage inequality between skilled and less skilled workers is found to be affected negatively by the relative supply of skilled labor and positively by both the capital-to-GDP ratio and the ratio of exports of goods and services to GDP. A rise in trade openness and a shift toward a more skill-intensive production structure are expected to increase wage inequality as well as GDP. An increase in the supply of skilled workers since 1985 helped keep wage inequality stable. Raising the supply of skills and human capital via improvements in educational quality is necessary to slow or reverse the growth of wage inequality.
While the efficiency of skilled labor has risen since 1980, the efficiency of unskilled labor has not changed very much over this period. This reflected three factors: the complementary relationship between capital and skill, the worldwide development of skill-biased technological change, and the skill-intensive industrial structure in Korea. (The rest omitted)