The Korean Economic Forum
Natural Experiments on the Wage Differentials between Standard and Nonstandard Work
Jong In Yoon (Baekseok University)Year 2023Vol. 16No. 3
AbstractThis study estimated the wage gap between standard and non-standard workers. The wage differentials by employment status are often overestimated because it is not controlled using control variables or covariates. Nevertheless, finding appropriate control variables or covariates is very difficult. Therefore, this study conducted a natural experiment focusing on workers who experienced changes in employment status. According to the results, in the case of workers who switched from standard to non-standard workers, 77.2% of the wage change was explained by the employee attributes and the rest by the employment status. In addition, in the case of workers who switched from non-standard to standard workers, 70.5% of the wage change was explained by the employment status and the rest by the employee attributes. From this, comparing the wages of standard and non-standard workers, the latter was 12.5~18.4% lower than the former.