DP12698 Wage Inequality and Establishment Heterogeneity

Author(s): In Kyung Kim, Jozef Konings
Publication Date: February 2018
Keyword(s): Globalization, Managerial talent, Wage inequality
JEL(s): F16, J31
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12698

We analyze wage dispersion within and across establishments in Korea between 2007 and 2013. We find that foreign owned establishments and those operating in global markets have higher within establishment wage dispersion. The effect is over and above the establishment size effect. Furthermore, wages are higher in larger establishments and internationally oriented ones. Our findings are consistent with theories explaining management pay and the scope of control. Our results also provide evidence that can explain the rise in wage inequality due to the emergence of "super star" firms and global supply chains.