• Journal of Labour Economics
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• v.32 no.2
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• pp.61-93
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• 2009

In this paper, we estimate the wage premium of English skills in the Korean labor market using Korean Labor and Income Panel Study(KLIPS) data. In a simple OLS model, we find that people with some English skills in terms of self evaluation or job requirement earn 30% more than those who do not have English skills. But in a small sample of relatively young people, higher English lest scores do not raise earnings. When we add SAT scores in the wage equation, there is no wage premium of English skills, and in the IV estimation, we find no "English premium". These results consistently imply that while there is a large wage premium of English skills in the Korean labor market, it reflects unobservable ability for the most part. Meanwhile some of the regression results favor human capital theory over screening theory as an explanation of the nature of the wage premium of English skills.

• Analyses & Alternatives
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• v.6 no.1
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• pp.35-68
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• 2022

In this paper we define wage premium of college hierarchy as a wage differential among college graduates from different universities within the same graduate cohort and estimate the wage premium of college hierarchy for the three different cohorts: namely, 1982, 1992, and 2002. We utilize a unique data set called Education-Labor Market Lifetime Path Survey, which contains education and labor market information about the three different college graduate cohorts. We find that the wage premium of college hierarchy changes over time for the same cohort. It tends to large right after graduation but decrease with labor market experience. When the test score at the time of college entrance controlled, the wage premium of college hierarchy mostly disappears for the 1992 cohort. But for the 2002 cohort it remains seven years after graduation. The difference in the wage premium of college hierarchy can be explained, at least partly, by the number of colleges, college enrollment ratio, and the relation between college hierarchy and the entrance test score.

• Journal of Labour Economics
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• v.41 no.4
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• pp.63-105
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• 2018

This paper analyzes the effects of three factors on the firm-size wage premium which have not been considered in previous studies: the worker compositions within firms, the wage differentials between contractors and subcontractors, and the performance pay and rent-sharing behaviors of firms. The main results are as follows. First, even after controlling for the various worker characteristics, the differences in shares of highly educated workers, managers, and professionals between large and small firms make the size-wage premium larger. Secondly, wage differentials between contractors and subcontractors also affect the size-wage premium in the manufacturing sector. Thirdly, high performance pay and active rent-sharing behaviors of large manufacturing firms make the size-wage premium larger. These results imply that a positive matching effect among skilled workers, a structural problem between contractors and subcontractors, and differences in rent-sharing behaviors between large and small firms have affected the firm-size wage premium in the South Korean labor market.

• Journal of Labour Economics
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• v.31 no.3
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• pp.75-105
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• 2008

This paper examines the changes over lime in union relative wage effects during the period of 1988 and 2007. The union wage premium was 3.4 percent in average during the last 20 years. It has fallen in the boom years up to the mid-1990s, but has rapidly risen since the Asian financial crisis of 1997. Time series evidence suggests that the union wage premium is counter-cyclical, which means that it responds to economic conditions with a reverse direction. There has been also a fast increase in the unadjusted wage gap relative to regression-adjusted wage gap during the last 10 years in particular, implying favorable changes in the selection of workers into unionized companies.

• KDI Journal of Economic Policy
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• v.14 no.4
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• pp.79-106
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• 1992

This study analyzes the determinants of wage premium, defined as the excess of actual wage rate over opportunity wage, for the average worker in a Korean bargaining unit. Average wage premium of a firm is decomposed into quasi-rent per worker and rent-sharing rule. Per capita quasi-rent, representing a firm's ability to pay, is defined as the difference between sales revenue and the opportunity cost of mobile factors, divided by the number of employees. Rent-sharing rule, a measure of workers' bargaining power, is defined as the average wage premium divided by the per capita quasi-rent. Empirical results show that the differences in wage premium among Korean bargaining units are much better explained by the differences in quasi-rent than by the differences in bargaining power. Also, comparing the results of 1986 with those of 1988 show that the wage settlement mechanism in 1988 was not quite different from that of 1986, in spite of the drastic change in industrial relation system in 1987. It may simply yield higher opportunity wages, by raising the bargaining power of overall workers. The tendency of Korean labor market in 1988 to show a dual structure of high & low wage premium sectors, is not due to the fact that the differences in bargaing powers across firms tend to expand, but to the fact that unions tend to reduce the wage differences among the workers within an enterprise by pursuing more equal distribution of total wage premium. Hence, the policies for reducing the wage differentials across firms should focus on rent-regulating industrial policies, e.g. eliminating monopoly rents by deregulation.

• Journal of Labour Economics
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• v.33 no.3
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• pp.129-149
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• 2010

We find that there is the height premium in the Korean labor market. The wage increases by 1.5% with a centimeter increase of height among male workers of ages 30-49. This estimate is barely affected by family backgrounds such as a worker's father's education or occupation. It is rejected that a worker's height is a proxy variable for his health, which increases his wage. The height premium is unrelated with obesity. It is not also supported that a worker's height affects his wage through his occupational choice. We partly confirm that a worker's height affects his wage through his educational choice. The estimated height premium of 30's in Korea is comparable to that of age 33 in Great Britain.

• Journal of Labour Economics
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• v.34 no.1
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• pp.103-138
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• 2011

This paper examines the changes in relative wage of top 10 college graduates to the other college graduates among the age group of 26-28 years using Korean Labor and Income Panel Study (KLIPS). From 1999 to 2008, the wage differential between top 10 college graduates and the other college graduates increased in South Korea. This wage differential seems to persist along with their age. Within industry wage differential among college graduates also rose but in the late 2000s it became smaller than the wage differential within firm size and industry. Increase in elite college wage premium has led to recent changes in college wage premium.

• KDI Journal of Economic Policy
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• v.33 no.2
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• pp.111-143
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• 2011

As the 'jobless growth' is developing into a worldwide phenomenon, many countries try to recover a virtuous relationship between the growth and employment using various wage subsidy programs. This study focuses on wage subsidy to employers, labor demand-side wage subsidy for which one can think of two types-a tax credit(a flat wage subsidy) and a social insurance premium exemption(a proportional wage subsidy). For job creation, Korean government reintroduced a tax credit to small and medium-sized enterprises(SMEs) which have increased their employment level in 2010. But many experts has continuously insisted that it should be replaced with a social insurance premium exemption arguing only a few SMEs benefit from the tax credit as most of them are actually not paying any corporate or general income tax bills. However, as the insurance premium exemption accompanies an increase in the amount of budget with the coverage widen, one cannot confirm its cost effectiveness over the tax credit. This paper aims to provide a theoretical analysis to derive some formal conditions under which a social insurance premium exemption creates more jobs than a tax credit does given a budget constraint. We show that the former's dominance over the latter depends on whether there exists a dead zone of social insurance or not. If there does not exist a dead zone, a social insurance premium exemption is more desirable in many cases, whereas one cannot guarantees its dominance over a tax credit if there exists a dead zone. Therefore in order to realize its dominance, the government should minimize a dead zone so that most SMEs effectively benefit from the insurance premium exemption. In addition, applying discriminative exemption rates which reflect each firm's job conditions such as wage level and labor demand/supply sensitivity, the government try to enhance job creation effect.

• Journal of Labour Economics
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• v.40 no.1
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• pp.69-97
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• 2017

This paper estimates the public and private sector wage gap trend from 2000 to 2014 using 'Korean Labor and Income Panel Study.' We account for unobserved fixed effect by using 1st differencing log wage in order to allow the gap to vary over time. Standard OLS estimates present the public sector wage is 10% higher than private sector on average. Moreover, the public sector wage premium displays the inverted V shape: sharply increasing up to 2006 and decreasing from 2007 to 2014. However, after controlling unobserved fixed effect, the public sector wage premium disappears and does not display the inverted V shape any more.

• Journal of Labour Economics
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• v.34 no.2
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• pp.79-107
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• 2011

This study investigates the status of English scores in the Korean labor market. We provide an empirical explanation of how English scores affect labor performances in Korea. Specifically, we focus on the effects of TOEIC scores on college graduates' job opportunity and wage premium. Our empirical tests for TOEIC scores are implemented in three dimensions: (1) Screening effects (2) Signaling effects (3) Wage effects. The results are as follows. First, we find the positive correlation between TOEIC scores and job opportunities, which implies that TOEIC scores play an important role in employee selection process. Second, our tests give the same results when it comes to job seeker's use of TOEIC scores as signaling instrument. That is, high TOEIC scores have positive signaling effects in the labor market. However, there also exists disadvantage effect of low TOEIC scores, in that job applicants with TOEIC scores below certain level are even more disadvantageous than those with no TOEIC scores. Finally, wage premium of TOEIC scores are found, even when other variables (e.g. GPA) are controlled or we use the instrumental variable estimate.