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  • Research Project Title
    Longitudinal Study on Female Employment in South Korea: Selection into Work, Gender Wage Gaps, and COVID-19 as a Labor Market Shock
  • Project Title
    Research in 2021
  • Project Manager(s)
    Seonho Shin
  • South Korea has long held the widest gender pay gap among OECD countries, but recent research suggests that gender wage gaps have narrowed in South Korea. However, if overlooked, the intrinsic inability to observe market wages of non-employed people biases gender wage gap estimates, and even more so if employment rates differ greatly across genders, which is the case in South Korea. Considering this econometric issue, the current research questions whether gender wage gaps in South Korea have narrowed by allowing for non-random, systematic selection of individuals into employment. 

    For this purpose, I use the extremal quantile sample selection estimator on the Economically Active Population Survey data, holding constant the workforce composition in terms of both observables and unobservables. This approach, in which identification is based on independence-at-infinity, is econometrically beneficial in that it is free from a joint normality assumption, and an exclusion restriction variable is not needed. 

    Results suggest that the nation’s gender wage gap widens when endogenous selection into employment is considered. From 2007 to 2020, the selection-uncorrected (‘raw’) gap reduced substantially, but the selection-corrected (‘true’) gap remained stagnant, suggesting that female selection became more positive (or less negative) in South Korea during that time. However, the COVID-19 pandemic appears to have caused a huge deviation from this pattern, and thus policymakers should be aware of the worrying possibility that South Korea’s female labor force composition has been massively affected by the pandemic-induced crisis.