Wage Differentials Across Social Service Industries: A Comparison between Social Welfare Services and the Health, Education, and Public Administration Sectors

Abstract

This study empirically examines wage differentials between the social welfare services sector—a core segment within the social service industry—and other sectors including health, education, and public administration. Although persistent concerns have been raised regarding low wages and poor working conditions in the social welfare services sector, prior studies have predominantly relied on occupational classifications rather than industry-level comparisons, resulting in largely descriptive analyses and limited empirical investigations into wage disparities. Using the Local Area Labour Force Survey conducted by Statistics Korea between 2013 and 2023, we longitudinally analyse trends of wage differentials between the core and other sectors in the social service industry. The Oaxaca-Blinder decomposition was applied to analyse mean wage differentials, while distributional differences were examined through an integrated approach combining the Recentered Influence Function (RIF) and the Oaxaca-Blinder method. The findings reveal that the hourly wage gap has gradually narrowed over the past decade, while the gap in monthly earnings has widened. Moreover, changes in the magnitude and structure of wage differentials varied across the wage distribution, with shifts in the workforce composition within the social welfare services sector significantly contributing to these changes. Based on these results, the study discusses the necessity of policy interventions aimed at improving the compensation structures and enhancing the quality of employment for workers in the social service industry.