This article uses a rich microdata set for 1971 to 1992 that is highly suitable for performing decompositions to explain the trends in Korea's gender earnings differential. Results from a fairly standard cross-sectional decomposition indicate that women's relative progress in observed productivity traits such as education and experience play an important role in the 1983 reversal. However, a large and growing portion of the earnings disparity between men and women remains unexplained. Other developing country studies typically stop here and attribute this growing residual gap to increased wage discrimination by gender. This study uses a more detailed trend analysis to separate changes in market returns to skills, which have little to do with discrimination, from the residual gap. Because men tend to have more education and experience compared with women, any drop in the returns to education and experience causes average male earnings to fall relative to average female earnings. Results from the trend analysis indicate that a strong compression in market returns to skills, combined with narrowing gender differences in education and experience, explain most of the post-1983 catch-up in women's relative earnings.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics