Differences in the Process of Earnings Determination and Inequality between Women and Men in South Korea

Abstract

This study examines the process of earnings determination of workers and assesses the explanatory power of human capital and sex segregation theory on earnings inequality between women and men in the South Korean labor market. It analyzes a pooled cross-section and time series data set for all non-agricultural occupations for 14 years. Two separate regressions for men and women are estimated using two stage weighted least squares methods. The research findings show that education and tenure have positive effects on logged earnings as expected. Proportion female negatively affects earnings of men and women while women tend to experience four times greater penalty for working with other women in occupations. However, the sex segregation becomes an insignificant factor in lowering women's earnings level when occupational groups are controlled. Gender earnings inequality gradually decreased during 14 years as the earnings of women increased more than those of men.