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Effects of cohort size on male experience-earnings profiles in Korea

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Title: Effects of cohort size on male experience-earnings profiles in Korea
Authors: Sin, Yŏng-su, 1952
Keywords: Wages -- Korea (South)
Labor supply -- Korea (South)
Cohort analysis
Issue Date: 1986
Abstract: The objective of this study is to investigate the relationship between labor force age (or experience) composition and the experience-earnings profiles in Korea in order to understand the dynamics of these earnings profiles. It has been argued that the aggregate earnings profiles may be twisted over time when the age composition of the labor force changes, and workers of different ages are imperfectly substitutable in production. During the 1970s and early 1980s, the structure of male earnings changed noticeably and the changes coincided with the arrival of the peak-sized cohorts spawned by the post-Korean War baby boom. Thus, the changes in age composition of labor force are supposed to be a major factor in the explanations given for the earnings changes. Theories and approaches which hinge on the supply of labor have been advanced and empirically examined by Freeman (1979) and Welch (1979), and modified and broadened by scholars such as Giant and Hammerers (1981) and Berger (1983b, 1984, 1985) in the case of the U.S. Even though previous research has established that baby-boom cohorts have suffered depressed earnings relative to older cohorts, there is a disagreement regarding the steepness of the earnings profile of these large cohorts. In specifying human capital earnings equations for the analysis in the case of Korea, this study modified the specification employed in the previous studies. First, the earnings equations are here estimated by firm size and educational level in order to consider the firm size differences in demand for labor. Second, the period effects on real earnings are eliminated to avoid a specification error and completely capture the parallel shifts of cross-sectional earnings profiles over time. In this pooled time-series analysis by using the data from Occupational Wage Surveys of Korea covering the period from 1972 to 1982 by two years intervals, it is found that while cohort size depresses earnings at entry, these negative effects of cohort size diminish and wages reach "normal" levels at relatively young ages, except for college graduates in small and medium-size firms. That is, cohort size generally has a negative effect on earnings levels, but a positive effect on early career earnings growth in Korea's labor market. r4oreover, the greatest positive effect on earnings growth is found in small firms for all education levels, which is consistent with the idea that the substitutability between younger and older workers is greatest in small firms, and the smallest in large firms. The regression results for the college graduates in small and medium firms indicate a positive effect of cohort size on earnings even in the early career phase. One interpretation of this finding is that there would be relatively strong complementarity between work activities performed at different phases of the career in professional and managerial capacities where the highly educated tend to be concentrated. The other possible interpretation is that there could be a specification error in the earnings equations estimated, which do not completely control for changes in the quality of schooling in different cohorts. In summary , cohort size effects on earnings levels generally appear to decline with experience. The effects of large swings in demographic composition of the labor force on the structure of earnings may be temporary in nature.
Description: Typescript.
Thesis (Ph. D.)--University of Hawaii at Manoa, 1986.
Bibliography: leaves 97-102.
x, 102 leaves, bound ill. 29 cm
Rights: All UHM dissertations and theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission from the copyright owner.
Appears in Collections:Ph.D. - Economics

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