Do anti-discrimination laws alleviate labor market duality? Quasi-experimental evidence from Korea

Abstract

Labor market segmentation is a growing phenomenon in many countries across different continents. In 2007, the Korean government undertook a labor reform prohibiting undue discriminatory treatment against fixed-term, part-time, and dispatched workers in an attempt to address income inequality arising from labor market duality. By exploiting a gradual introduction of the anti-discrimination law by firm size, I identify the treatment effects of the anti-discrimination law on gaps in wage and non-wage benefits between regular and non-regular workers, taking a difference-indifferences approach, a quasi-experimental design. My findings suggest that the imposition of the anti-discrimination law has significantly narrowed gaps in labor conditions between regular and non-regular workers. Labor conditions of targeted nonregular workers did not improve at the expense of those of non-targeted non-regular workers. Nevertheless, non-targeted non-regular workers being treated in a less favorable way raises another concern about the possibility of overusing non-targeted non-regular workers.