Income Inequality in South Korea, 1933-2022

While South Korea was one of the poorest countries in the world in the 1960s, it sustained positive growth in the 1980s and 1990s until the Asian financial crisis in 1997. But has this so called “Miracle on the Han River” really lifted Korea out of poverty without increasing inequality?

Using household survey micro data, tax data, and national accounts, Sehyun Hong, Nak Nyeon Kim, Zhexun Mo, and Li Yang construct annual pre-tax income inequality series for South Korea since 1933. They show the distribution of pre-tax national income over the period from 1933 to 2020, with detailed breakdown by age, gender, and income composition in the years from 1996 to 2020.

Key findings

• The share of pre-tax national income at the top declined between the 1930s and 1970s and then increased. After the Asian financial crisis in 1997, income inequality worsened and is now approaching the levels of the colonial era. The rise in top income concentration in recent years is mostly associated with an increase in capital income inequality.
• Compared with other East Asian countries, South Korea has relatively lower levels of income inequality, mostly due to the fact that its national income growth was more equally distributed in the early stages of economic take-off in the 1980s. Yet, income inequality has worsened over the last three decades.
• Despite similar economic backgrounds and development trajectories, Taiwan displays higher levels of inequality than South Korea since the mid-1980. This gap stems mostly from the fact that the distribution of capital income in Taiwan has been much more unequal than in Korea.
• South Korea is characterized with relatively higher gender inequality and lower old-age income shares compared to the United States and France.
• This paper paves the way for further research on inequality in East Asia.

AUTHORS

• Sehyun Hong, Paris School of Economics; World Inequality Lab
• Nak Nyeon Kim, Dongguk University, WID Fellow
• Zhexun Mo, Paris School of Economics; World Inequality Lab
• Li Yang, ZEW-Leibniz Centre for European Economic Research; World Inequality Lab

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