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Analysis of Pay Inequality and its Impacts on Growth and Performance in Korean Industry
Seoul Natl Univ, Coll Engn, Technol Management Econ & Policy Program TEMEP, Seoul 151742, South Korea.
Seoul Natl Univ, Coll Engn, Technol Management Econ & Policy Program TEMEP, Seoul 151742, South Korea.
Seoul Natl Univ, Coll Engn, Technol Management Econ & Policy Program TEMEP, Seoul 151742, South Korea.ORCID iD: 0000-0002-7902-4683
2008 (English)In: 2008 KDI-KAEA Conference on Enhancing Productivity and Sustaining Growth, 2008, 281-307 p.Conference paper, Published paper (Refereed)
Abstract [en]

This paper examines the relationship among pay inequality, economic growth and innovation in Korea. We estimate pay inequality in Korea’s manufacturing sector using panel-level data for the period 1993 to 2003. The objective is to estimate pay inequality by using Theil’s index and to identify the factors determining pay inequality and find the relationship with economic growth and innovation. We first review changes in industrial trend, production, and investment patterns over the period and how those changes led to the creation of a relative pay inequality between and within regions and sectors. We then compare the annual changes in manufacturing pay inequality and annual GDP growth, finding that the previously stable and negative relationship predicted by Kuznets broke down at the height of the period of structural reform in Korea, giving way to a positive relationship after 1998. On the basis of Theil’s T statistics, results show a positive relationship between firms’ pay inequality and size, location, R&D, export and business sectors. The relation holds even when we control for individual, time period and firm characteristics. The decomposability property of the Theil index enables us to show that manufacturing pay inequality in Korea has risen both across sectors and regions, though more strongly across industrial sectors. Despite controlling for changes in the level of real per capita income, the rise in inequality accelerates in the period following the introduction of reforms. It appears that a large part of rising pay inequality can be attributed to rising relative pay in the ICT sector. The findings support the hypothesis of an “augmented” Kuznets Curve according to which some developed countries are found on an upward-sloping addendum to Kuznets’original formulation.

Place, publisher, year, edition, pages
2008. 281-307 p.
Keyword [en]
Pay Inequality; Financial Crisis; Kuznets curve; innovation
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-24636ISBN: 978-89-8063-384-5 (print)OAI: oai:DiVA.org:hj-24636DiVA: diva2:743476
Conference
KDI-KAEA Conference on Enhancing Productivity and Sustaining Growth 2008, Korea Dev Inst, Seoul, SOUTH KOREA, JUL 08, 2008
Available from: 2014-09-04 Created: 2014-09-04 Last updated: 2016-01-14Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
  • harvard1
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More styles
Language
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