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Analysis of pay inequality and its impacts on growth and performance in the Korean manufacturing industry

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  • Analysis of pay inequality and its impacts on growth and performance in the Korean manufacturing industry
  • Kim, Yunhee; Lee, Jeong-dong; Heshmati, Almas
  • Institute for the Study of Labor


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Title Analysis of pay inequality and its impacts on growth and performance in the Korean manufacturing industry
Similar Titles
Material Type Reports
Author(English)

Kim, Yunhee; Lee, Jeong-dong; Heshmati, Almas

Publisher

Bonn:Institute for the Study of Labor

Date 2008-10
Series Title; No IZA discussion papers / 3774
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Conditions
Industry and Technology < Manufacturing
Holding Institute for the Study of Labor

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.