A Study on Regional Wage Differentials
in Korea: in Metropolitan vs. Non-
Metropolitan Areas
*
Lee
Jongsoo
In order to investigate the cause of regional wage disparity, an
examination was made to compare the Metropolitan areas with the Non-
Metropolitan areas. Wage estimation indicated that years of education,
health conditions, permanency of employment and the existence of a
labor union had a positive impact on wages in the Metropolitan areas.
Meanwhile, it was the years of employment and permanency of
employment that would have impact on wage increase. Per industry
sector, wages in financial, insurance and construction were higher in the
Non-Metropolitan areas than in the Metropolitan areas. However, an
opposite trend appears in public service industry. Per occupation,
professionals and managerial positions earn more in the Metropolitan
areas than in the Non-Metropolitan areas; this was also confirmed for
simple labor, equipment and machinery operation and assembly fields.
While the number of private institutions and the ratio of road pavement
have a positive impact on increasing wages, the presence of social welfare
facilities also brought about decrease in wages and this was more evident
in the Non-Metropolitan areas.
Then, using the Oaxaca decomposition equation was used to break
down wages by regions and analyze key factors in wage differentials. The