Seniority, Experience, and Wages in South Korea

Using 20 years of data from the Korean Labor and Income Panel Study (KLIPS), this paper examines the wage returns to general experience, firm tenure, and industry- and occupation-specific tenure in South Korea. Employing the Altonji and Shakotko instrumental variable approach and the Topel two-step estimation method, I address biases from unobserved heterogeneity. The results reveal that 10 years of tenure have no significant effect on log wages, while 20 years of tenure increase wages by 11 %–30 %. Sector-specific skills play a critical role in wage growth, while the occupation-specific returns are minimal.