Income and Wealth Inequality in Korea

Nak Nyeon Kim(김낙년), Jong-Il You(유종일), Frederick Solt

This monograph aims to provide more reliable estimates of the past trends and the current levels of income and wealth inequalities in S. Korea by making use of a variety of data sources and estimation methods. Part I of the book presents estimates of income and consumption inequalities of households, wage differentials among workers, and top income shares on the basis of the household survey, the establishment survey, and the income tax data, respectively. While these surveys and data reveal certain aspects of income distribution, they often lead to contradicting and confusing pictures on income distribution (김낙년· 김종일  2013). Part I will shed light on the sources of such confusion and uncover a relatively complete picture of income distribution by combining information from various data sources.

Part II estimates the Distributional National Accounts of Korea and compares them with those of other countries. The incomes that are investigated in Part I are a subset of the comprehensive national income in the National Accounts, while the latter does not contain any information on distribution among income classes. We extend to Korea the recent attempts to estimate the Distributional National Accounts by combining the above two sources (Alvarado, et al., 2016), which have been applied to the US (Piketty, et al., 2016), France (Garbinti, et al., 2017) and China (Piketty, Yang et al., 2017) so far and are being extended to other countries. This approach allows us to assess how the fruits of economic growth are distributed to various income classes, and how redistribution through taxes, transfers and social expenditures affect disposable incomes of the various classes. Furthermore, it enables a consistent international comparison, since it is based on the National Accounts framework that is common to all countries.

Part III investigates inequalities of wealth. Since the survey data available at hand suffers from a severe under-reporting, they will be complemented by the property tax data in the case of real estate and by capitalizing financial incomes in the case of financial wealth. The Estate Multiplier Method will also be tried to estimate distribution of wealth from the estate tax data on inheritance bequeathed by the dead and probability of death by age and class. In addition, the extent to which accumulation of wealth occurs through savings or inheritance (including gift) in Korea will be investigated.

The book contributes to the globalization of Korean studies by applying new cutting-edge research approach to Korea and making it a core case for comparative studies.  

ToC:  1. Introduction; [Part Income Inequality] 2. Household Survey-based Approach: Inequality based on Household-level Income and Consumption; 3. Establishment Survey-based Approach: Wage Differentials of Workers; 4. Income Tax-based Approach: Top Income Shares and International Comparison of Earned Income Distribution; 5. Reconciliation and Aggregation; [Part Distributional National Accounts] 6. Methods and Estimates of DINA for Korea; 7. Distribution of National Income and International Comparison; [Part Wealth Inequality] 8. Property Tax-based and Financial Income-based Approach; 9. Estate Tax-based Approach; 10. Accumulation of Wealth: Savings and Inheritance