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Labor Market Reforms, Temporary Workers and Wage Inequality
Author(s) -
Kim HyeonKyeong,
Skott Peter
Publication year - 2016
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12122
Subject(s) - labour economics , economics , wage , wage inequality , efficiency wage , split labor market theory , promotion (chess) , inequality , dual (grammatical number) , secondary labor market , labor relations , political science , mathematics , literature , politics , law , art , mathematical analysis
Temporary workers make up a sizeable part of the labor force in many countries and typically receive wages that are significantly lower than their permanent counterparts. This paper uses an efficiency wage model to explain the wage gap between temporary and permanent workers. High‐performing temporary workers may gain promotion to permanent status, and a high wage to permanent workers therefore serves a dual purpose: it affects the effort of both permanent and temporary workers. Applying the model to the Korean experience, we discuss the effects of the labor market reforms in 1998 on inequality.