Home Articles Abstract
Research Article

The Relationship between Corporate Characteristic Factors and Wage System Characteristics as Position-Based and Non-Position-Based Firms

Kim, Yeongin

Published: January 1997 · Vol. 26, No. 4 · pp. 875-891
Full Text

Abstract

Through prior research, the author has argued that the wage system of Korean firms is not the seniority wage system that has been conventionally assumed, but rather a position wage system designed to realize hierarchical labor control, and therefore the wage system should be understood from the perspective of position-based wages. This paper extends the author's perspective further by dividing the sample firms into two categories: position-type firms, where position is the primary factor explaining inter-individual total wage differentials, and non-position-type firms, where factors other than position primarily explain inter-individual total wage differentials. Hypotheses were established regarding the differences between these two types of wage systems and firm characteristic factors, and these hypotheses were tested, along with several additional analyses. The main results from the theoretical and empirical analyses can be summarized as follows. First, regarding the differences between firm characteristic factors and wage system characteristics, differences were found between position-type and non-position-type firms according to industry type, labor income share, and firm history. However, no differences were found between the two types of firms with respect to firm size, per-capita sales, per-capita value added, capital-labor ratio, proportion of male workers, proportion of male workers in managerial/clerical/technical positions, major shareholder ownership ratio, and the existence of affiliated companies. Second, in an additional stepwise regression analysis with wage level as the dependent variable to identify the factors most significantly affecting wage level differentials, for position-type firms, the R² of the first factor—proportion of male workers—was 0.4233, while for non-position-type firms, the R² of the first factor—per-capita value added—was 0.5840. Although the cumulative R² values were similar between position-type and non-position-type firms, the determination of wage levels for each firm group could generally be explained differently.