Military expenditure and income distribution in South Korea

Yemane Wolde-Rufael

Defence and Peace Economics, 2016, vol. 27, issue 4, 571-581

Abstract: This paper attempts to investigate the long-run and the causal relationship between military expenditure and income distribution in South Korea for the period 1965--2011. Applying the bounds test approach to cointegration, we found a long-run relationship between military expenditure and the Gini coefficient with military expenditure having a positive and a statistically significant impact on income inequality. A 1% rise in military expenditure increased the Gini coefficient by 0.38%. Application of the lag-augmented causality test also reveals a unidirectional causality running from military expenditure to income inequality. The evidence seems to suggest that devoting more resources to the military sector may further worsen income inequality in South Korea.

Date: 2016
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DOI: 10.1080/10242694.2014.960247

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