Technological change and wage premium in a small open economy: the case of Korea

The aim of this study is to analyse the relationship between technological change and the educational wage premium in Korea. The main findings are as follows. First, the changes in educational wage premium were mostly affected by shifts in the Supply of college graduates from 1983 to 1993 while the changes were affected more by the shifts in labour demand from 1991 to 2000. Second. the educational wage premium is greater in the industries with rapid technological change than in the industries with slower technological change. Third. the educational wage premium associated with the technological change is mostly explained by the returns to worker's unobserved heterogeneities. which is correlated with education, rather than the returns to education per se. Finally, there are some evidences that skill biased technologies are developed as the number of skilled workers are increasing.