This paper reviews existing literature on the outsourcing and wage inequality
and empirically analyzes the effect of global outsourcing on the wage inequality
in manufacturing in Korea from 1999-2006. We employed the System GMM
with data obtained from the Mining and Manufacturing Surveys, Input-Output
Tables and SKTC Trade Statistics. Our findings are as follows. First, log wage
differential between skilled and low-skilled workers decreased by 3.3%.
Second, narrow and wide measures of global outsourcing increased by 7.1%
and 12.6% respectively. Third, narrow outsourcing had a significant impact on
the wage inequality. Fourth, the effect of wide outsourcing was insignificant.