Technological change and wage premium in a small open economy: the case of Korea

Abstract

The aim of this study is to analyse the relationship between technological change and the educational wage premium in Korea. The main findings are as follows. First, the changes in educational wage premium were mostly affected by shifts in the supply of college graduates from 1983 to 1993 while the changes were affected more by the shifts in labour demand from 1993 to 2000. Second, the educational wage premium is greater in the industries with rapid technological change than in the industries with slower technological change. Third, the educational wage premium associated with the technological change is mostly explained by the returns to worker's unobserved heterogeneities, which is correlated with education, rather than the returns to education per se. Finally, there are some evidences that skill biased technologies are developed as the number of skilled workers are increasing.

Does unmeasured ability explain the wage premium associated with technological change?: Quantile regression analysis

“…The educational reform in 1980 restructured the quota system and increased the number of college graduates dramatically. 8 Choi and Jeong (2005) also show that the skill premium associated with technological change is mostly explained by the returns to workers' unobserved heterogeneities. They use the two-stage double fixed effects, developed by Bartel and Sicherman (1999).…”

“…However, despite a continuing influx of college graduates into the labour market, it increased again since the mid-1990s. The recent increase in college wage premium is found to be closely related with the technological change in Korea (Hur et al, 2002;Kang and Hong, 2002;Choi and Jeong, 2005). 8 Considering these dynamics in the labour market, the Korean case would be an ideal setting for testing the hypothesis.…”

“…Wage premium associated with technological change Choi and Jeong (2005) estimate the following earning equation to test the positive relationship between technological change and the wage premium.…”

Effect of technology on gender wage differential: a panel analysis

“…The rate of technological change across industries is emphasized by referring to cross-sectional approach. Choi and Jeong (2005) add on Bartel and Sicherman (1999) that only workers with higher education get higher wages in those industries. Another study dealing with the question of how technological change is related to changes in wage gaps by schooling, experience and gender puts forward that wage gaps by schooling increases in the most industries with rising R&D intensity and accelerating growth in capital-labour ratio (Allen, 2001).…”

Technological Change, Job Risk, and Wage Premium: Evidence from Taiwan

“…Studies using industry‐level data (e.g., Hodson and England ; Loh ) or plant‐level data (e.g., Krueger ; Doms, Dunne, and Troske ) have mostly supported a positive influence of technological change regarding wages. However, Bartel and Sicherman () and Choi and Jeong () argued that the positive relationship between technological change and educational wage premium is rather weak after controlling for individual unobserved heterogeneity in the United Kingdom and South Korea, respectively. However, by including occupational or industry fatality rates as explanatory variables in the wage equation, previous studies have generally shown that job risk has a significantly positive impact on wages (e.g., Leeth and Ruser ; Hartog et al .…”