Marriage Premium Effect on Wage Among Male Workers in Korea

Purpose: There have been controversial discussions about the factors affecting differential wages between married and non-married male workers in western society. Two dominant hypotheses are mainly cited: (1) the productivity hypothesis and (2) the selection hypothesis. The productivity hypothesis which traces back to Becker’s (1991) theory argues that married men can get an opportunity to specialize in labor market because their spouses tend to take a primary role in domestic tasks. On the other hand, the selection hypothesis claims that men with high ability and attractiveness tend to appeal in both the labor and the marriage market. Thus, the wage gap between married and non-married men is caused by not marital status but their innate characteristics. However, this topic has not been paid attention in Korea where has experienced rapid economic growth and socio-cultural changes during the last four decades. Using nationally representative data in Korea, the present study aimed (1) to explore trends regarding the wage gap between married and non-married males in Korea and (2) to examine the effects of the marriage premium of male workers on wage.

Method: The study used panel data from the Korean Labor & Income Panel Study (KLIPS) from 1998 to 2010. The KLIPS is an annual survey, gathered through two-stage stratified clustering method. The sample consisted of employed male workers who are 15 year or older (N=33,218). For the first research question, trends of nominal and inflation adjusted monthly wage using Consumer Price Index between married and non-married men were examined. In addition, a fixed effects regression model was used to estimate the effects of the marriage premium, controlling for human resource factors (education and work experience), occupation factors (employment status, occupation, and firm size), and unobserved fixed individual characteristics.

Results: The study findings show that an average wage of married males has exceeded that of non-married men by a factor of 1.4:1 over a 13-year period, and the wage gaps have increased over the same period. While married men’s wage increased $49 per year on average, non-married men’s wage grew by only $35 per year. Moreover, marital status was found to be a significant factor associated with the wage gaps between the two groups, after controlling for unobservable fixed characteristics which would affect both wage and marital status. Specially, married men earned 26.1% higher wages than never-married male workers (p<.001) and 12.6% higher than divorced, separated, or widowed men (p<.001).

Conclusions and Implications: The results of this study imply that Korean society has experienced significant wage gaps among males based on their marital status. The productivity hypothesis receives support from the findings because a premium remains after controlling for unobserved fixed effects. It suggests that married male workers have more opportunity to increase their productivity thanks to their spouses’ ‘marriage penalty’. Social policy makers should be aware of gender equality in labor market and make an effort to improve family-friendly labor market policy in Korea.