This paper investigates how much skill-biased technological change andglobal outsourcing can account for income disparity between skilled andunskilled workers in Korea. To this end, the panel data for 62 industriesincorporating the manufacturing and service sectors are compiled for the periodfrom 1990 to 2007 and three methods are applied: (i) factor decomposition forinter and intra industrial variations; (ii) estimation of translog cost function;and (iii) estimation of mandated wage equation. The estimation results overallindicate that skill-biased technological change plays a major role in theincrease in the demand for skilled workers, which directly leads to thepersistent increase in the skill premium. In the meantime, global outsourcingexplains 30-40% of the increase in the demand for skilled workers with itsgrowing effect since the 1997 Asian Crisis.