Abstract

Numerous studies have found a strong positive association between the level of education and economic returns (i.e., earnings). This relationship, however, has received less examination in the context of institutional or temporal variability. Drawing on the experience of South Korea in the decade after the 1997 Asian financial crisis, this study examines the role of education in rising earnings inequality under a radically changing institutional environment. Based on data from the Korean Labor Income Panel Study and Theil index decomposition, this study finds that despite the robust association between education and earnings inequality in post-crisis South Korea, a substantial amount of the rise in overall inequality is primarily attributable to rapid increase in within-educationgroup inequality rather than between-group inequality. This demands renewed attention to the role of education in earnings inequality to fully account for the changing dynamics of inequality in the twenty first century.

Keywords

Earnings inequality, Education, Rising inequality, Asian financial crisis, South Korea

10.1007_s40483-013-0005-y