Analysis of Pay Inequality and Its Impacts on Growth and Performance in the Korean Manufacturing Industry

31 Pages Posted: 3 Nov 2008

See all articles by Jeong-Dong Lee

Jeong-Dong Lee

Seoul National University

Almas Heshmati

Sogang University; Jönköping International Business School

Yunhee Kim

Trade in Services Division

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.

Keywords: pay inequality, financial crisis, Kuznets Curve, economic growth, performance

JEL Classification: C43, J31, J38, O4

Suggested Citation

Lee, Jeong-Dong and Heshmati, Almas and Kim, Yunhee, Analysis of Pay Inequality and Its Impacts on Growth and Performance in the Korean Manufacturing Industry. IZA Discussion Paper No. 3774, Available at SSRN: https://ssrn.com/abstract=1293546 or http://dx.doi.org/10.2139/ssrn.1293546

Jeong-Dong Lee

Seoul National University ( email )

Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)
82-2-873-7229 (Phone)
82-2-880-8389 (Fax)

Almas Heshmati

Sogang University ( email )

Seoul 121-742
Korea, Republic of (South Korea)
0082-2-705-8771 (Phone)

HOME PAGE: http://www.sogang.ac.kr/english/academic/03_under_0123.html

Jönköping International Business School ( email )

Jönköping, 551 11
Sweden

Yunhee Kim

Trade in Services Division ( email )

2 rue Andre Pascal
Paris Cedex 16, Paris 75775
France
33145248591 (Phone)
33145246163 (Fax)

HOME PAGE: http://www.oecd.org/trade

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