Labor Market Reform and Wage Inequality in Korea

Authors

Hyeon-Kyeong Kim, Korea Institute for Health and Social AffairsFollow
Peter Skott, University of Massachusetts at AmherstFollow

Working Paper Number

2014-13

Publication Date

2014

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.

DOI

https://doi.org/10.7275/6489470

Recommended Citation

Kim, Hyeon-Kyeong and Skott, Peter, "Labor Market Reform and Wage Inequality in Korea" (2014). Economics Department Working Paper Series. 198.
https://doi.org/10.7275/6489470