Analysis on Wage Gap responses to Education level and Skill

Eun Suk Kim(Ph.D. Candidate, Department of Economics, University of Seoul) and Bong Geul Chun(Associate professor, Department of Economics, University of Seoul)

This paper conducted a study from a variety of viewpoints by integrating education level and skill. As a result of estimating the wage premium caused by skill, the wage premium showed a persistent increase in the college graduates whereas it showed a sharp decline in the high school graduates.  In the estimation of the wage gap between the unskilled college graduates and skilled high school graduates, the result indicated that the skilled high school graduates could most effectively overcome the wage gap in the financial institutions and insurance industry. The unskilled college graduates could earn the highest wage compensation in the education industry. Finally, in the wage gap model between the unskilled college graduates and the skilled high school graduates, it indicated a need to increase demand for skilled high school graduates to reduce the wage gap.

JEL Classification Number: J23, J31

Keywords: education level, skill level, wage gap, wage premium