The union wage premium in a segmented labor market: new evidence from Korea

Abstract

Korea's labour market is highly dualized. Non-regular workers are subject to adverse labor conditions and unions, controlled by regular workers, usually restrict their entry as allowed by Korean regulations. Our objective is to analyse the union wage gap in Korea considering this institutional setting. In particular, we examine union wage effects using a more recent and richer dataset than previous studies, the Economically Active Population Survey (EAPS) data, that enables us to distinguishunion members from voluntary non-members, involuntary non-members, and workers in firms without unions. Our empirical analysis compares the wages of union members to those of different categories of non-unionised workers not only in the mean but also along the wage distribution using quantile regressions. Our results show that voluntary non-members experience a marginal wage penalty while for involuntary non-members it is much higher, a difference that could be reduced by removing regulations limiting non-regular workers from joining unions.