Exploring reasons why cross-section analysis underestimates the union premium in Korea

This study evaluates the cartel effects of Korean labour unions from the perspectives of job separation and loss of wage premium. Unlike the previous cross-sectional analysis showing that the wage premium of Korean labour unions is small, a high level of wage premium was observed in unionized companies. This was more prominent among long tenured union workers and among union workers in monopoly firms than it was amongst workers in other comparable groups. This demonstrates that those who work in unionized companies and enjoy a high level of employment security concentrate on building up firm-specific skills, and not on building-up alternative skills as preparation for potential job turnover.