Colloquium in December 2025
Young-Mi (Yonsei University)
This study analyzes changes in the sorting structure between occupations and firms in the Korean labor market. While the importance of firm effects in wage inequality trends has been confirmed in previous studies (Lee Byung-hee, 2023), the structure in which occupation and firm effects operate in combination has not been sufficiently explored domestically. This study utilizes the Wage Structure Basic Statistics Survey (1993–2020), which is employer-employee matched data, and following the methodology of Wilmers et al. (2024), applies a 2-way fixed effects model to decompose wages into occupation effects, firm effects, the covariance of both, and residuals, and analyzes their long-term trends.
The analysis results show that clear evidence of strengthened occupation-firm sorting (consolidated advantage) as appeared in the United States was not found. However, there is a tendency for firm effects and firm-occupation covariance effects to increase as age increases, which is closely related to institutional characteristics of the Korean labor market such as the seniority-based wage system, internal labor markets that reinforce age effects, and the non-formation of occupational labor markets. The cohort analysis shows that the contribution of firm effects appears large for those born in the 1960s-70s, and this effect shows a trend of being mitigated in cohorts after those born in the 1980s. These results suggest the possibility that employment restructuring in the Korean labor market has unfolded in a different pattern from the United States.
