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Income inequality in Korea, 1933-2010 : Evidence from income tax statistics

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Frame of Image ome shares using income tax statistics to study the evolution of income inequality in Korea. Income concentration was very high before WWII when Korea was under colonial rule but dropped sharply after WWII. It remained low during the period of rapid industrialization but has ascended since the mid-1990s. This U-shaped pattern of top income shares in Korea is similar to those in other industrialized countries but the factors for the shape may be different. We attribute the drastic fall in income concentration after WWII to economic collapse and political disruption from regime change after liberalization. We argue rising income concentration last 15 years could be attributable to two factors. First, we point out the drastic transition of major industries toward technology-intensive sectors along with deepening economic relationship with low-wage countries such as China caused diverging demands for different types of workers. We find the average wage income of the bottom income groups even declined in real terms last 15 years. Second, we suggest two institutional factors such as falling marginal tax rate since the 1980s and post-crisis changes in corporate governance system enforcing competition among the top management through performance-based rewards played an important role in increasing top incomes.
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This paper was presented at the Asia-Pacific Economic and Business History Conference 2013, in Seoul, Korea. ** Kim, Nak Nyeon, corresponding author, Professor, Department of


Full Text
Title Income inequality in Korea, 1933-2010
Similar Titles
Sub Title

Evidence from income tax statistics

Material Type Reports
Author(English)

Kim, Nak Nyeon; Kim, Jongil

Publisher

Seoul:Naksungdae Institute of Economic Research

Date 2013-02
Series Title; No Working Paper / 2013-05
Pages 25
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Macroeconomics
Holding NIER; KDI School