Market Characteristics, Human Capital Accumulation and Wage Structure： Empirical Evidence from the Korean Financial Sectors

This paper explores the nexus between industry-specific market characteristics and an industry’s wage structure and the pattern of human capital accumulation of workers. This study hypothesizes that the inter-industry differences in the market characteristics lead to the industrial differences in both skill requirements and the compensation scheme. The empirical evidence indicates that the competitive market structure and the “tailored” products of the Korean securities industry induce a large industrial wage premium, which escalates for high-ability workers, with human capital investment skewed toward general skills rather than firm-specific skills. The oligopolistic market structure and “standardized” products of the Korean banking industry yield an interesting labor market outcome that contrasts with its counterpart in the securities industry, which is worthy of elaboration.