Income Inequality in South Korea, 1933-2022: Evidence from Distributional National Accounts

Sehyun Hong, Nak-Nyeon Kim, Zhexun Mo and Li Yang ()
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Sehyun Hong: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Nak-Nyeon Kim: DU - Dongguk University
Zhexun Mo: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Li Yang: DIW Berlin - Deutsches Institut für Wirtschaftsforschung

World Inequality Lab Working Papers from HAL

Abstract: This study presents "Distributional National Accounts (DINA)" for South Korea. We combine household survey micro data, tax data, and national accounts to construct annual pretax income inequality series which is coherent with macro aggregates. We show the distribution of pretax 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. This series allows for a much richer analysis of the long-run income inequality trend in South Korea than previous work based on fiscal tabulation (N.-N. Kim, 2018), which only includes top income shares and misses an increasing component of tax-exempted capital income in recent years. Our new series suggests that after the Asian financial crisis in 1997, income inequality has worsened due to the rise of tax-exempted capital income concentration at the top. Additionally, South Korea is characterized with relatively higher gender inequality and lower old-age income shares compared to the United States and France. Compared to other East Asian countries, South Korea exhibits 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, even though income inequality has worsened over the last three decades. Rather strikingly, despite similar economic backgrounds and development trajectories, there is a huge gap in pretax national income inequality between Taiwan and South Korea. This gap stems mostly from the fact that the distribution of capital income in Taiwan has been much more unequal than that in Korea.

Date: 2024-01
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