A comparative analysis of inter-industry wage differentials: before and after the Korean financial crisis

Abstract

Korean economy has changed rapidly since the 1997 Korean financial crisis. This article investigates whether the inter-industry wage differentials in the Korean manufacturing industry are consistent over time and how the inter-industry wage structure has changed after the financial crisis. We used the 1995 and 1999 survey report on the wage structure–Korea. Our empirical results provide evidences for a wider inter-industry wage differentials and changes of the wage structure. After the crisis, company size, region (live in capital), sex, tenure, education are more critical to determine wages. According to factor analysis, the job quality factor is most closely related to wages before the crisis, while the industry attributes factor does in 1999.

Acknowledgements

This work was supported by Korea Science and Engineering Foundation, 2004 (ROS-2004-000-10376-0), and by the Research Grant from Hallym University, Korea. We would like to thank a referee of the journal for helpful comments and suggestions on earlier versions of this paper.

Notes

¹ See Park and Park (1984) and Cheon (1995).

² We select 1999 because, starting in 2000, the SRWS data replaced the criteria of selecting companies from those employing more than 10 workers to those employing more than five workers.

³ The SRWS sets the career variable categorically and provides the tenure variable numerically.