Wage Structure Determinants and Gender Pay Gap among Wage Earners: from Mean to Overall Log Wage Distributional Decomposition

Abstract

This study comprehensively investigates the wage structure determinants and gender pay gap in Korea. Using 2014 Korean Labor and Income Panel Study (KLIPS) data, we find that individual characteristics exhibit significant differences across the distribution and that magnitude and significance differ according to gender. Findings suggest that returns to education are high for women and experience is influential only for women at the upper wage distribution. By applying vigorous counterfactual decomposition method, we find large returns on characteristic differentials by gender, especially for lowly educated women. A strong glass ceiling effect in Korea is obtained, and the integrative effect is composed of the continuously increasing composition effect and N-shaped (i.e., low at both ends) structure effect. In particular, most of the explained differentials are attributable to the differences of experience. The high returns on education for women are beneficial for reducing discrimination (unexplained or structure effect).