Temporary-permanent Contracts’ Wage Gap across the Wage Distribution in South Korea : Using Unconditional Quantile Regression with Individual Fixed-effects

Abstract

This study examines the wage difference between temporary and permanent contracts across the marginal wage distribution in South Korea. For this, I estimate the relationship between the log value of hourly wage and contract types using Korean panel data and unconditional quantile regression with individual fixed-effects. I analyze men and women separately and carry out additional analyses by classifying temporary contracts into three exclusive categories : temporary contracts of one year or more, temporary contracts of less than one year, and casual contracts. The results show that temporary contracts incur a wage penalty relative to permanent contracts and this wage penalty is largely concentrated on low-wage workers, and also that low-wage workers with specific forms of temporary contracts appear to receive a severe wage penalty.