PUBLICATIONS & REPORTS

Contents Introduction

Since workers pursue their private interests and maximization of their earnings in particular, the existing corporate compensation policy and the workers' response to it would reveal important clues to the workers’ militant behavior. This paper analyzes the relationship between compensatory reward for long tenure and worker militancy in order to understand and improve upon the current state of Korean industrial relations. For the purpose, we analyze how the internal labor market mechanism and strikes, an expression of labor militancy, are related in Korean firms. Our findings, based on match data of the Korean Occupational Wage Survey and Labor Strife Data, confirm that the presence of an internal labor market mechanism with a steep wage-tenure profile does reduce strike incidence in the future. We also found that strikes result in a more egalitarian compensation structure in the next period, eroding the internal labor market mechanism and inviting the possibility of more strikes in the future.