The goal of this study is to identify and examine the factors that affect and determine income distribution structures, such as those along class lines, between rural and urban households, within agriculture itself, based on employment and wage structures, etc. This study also scrutinizes several related issues, including the correlation between educational investment and income distribution, and the status of absolute poverty and the need for income security.
The productivity of labor in Korea increased consistently between 1960 and 1976. Throughout this period, the primary means by which an average Korean could increase his wealth was to get a pay raise. While this pattern of wage-dependent income distribution has directly driven price increases on the Korean market, it does not explain the phenomenon of general inflation. During this period, wages grew and unemployment levels fell much more rapidly in the non-primary sectors than in the primary sector.
However. the situation has not been so favorable to agriculture and rural towns. The New Village Movement has helped to ensure secure sources of income for rural households over the last decade or so, causing the rural household income, agricultural income, and non-agricultural income levels to grow by 6.66 percent, 5.93 percent, and 9.14 percent respectively, on a yearly basis from 1965 to 1977. Peaking 1977, the rural household income began to decline, almost by two percent yearly. Even an investment of KRW 10 million in rural households and agriculture did not cause the rural income level to begin to rise at more than five percent. Agricultural projects involving KRW 5 million or less each are unlikely to increase rural income levels by more than two percent. However, the Korean government has introduced a series of subsidies to help compensate for the losses of rural income, including an 11 percent subsidy in 1974, an eight percent subsidy in 1975, a four percent subsidy in 1976, and a six percent subsidy in 1977.
While there can be numerous factors that affect income distribution, educational investment and attainment can be key indicators of how much one or one’s children will earn in the future. Increasingly in Korea, educational distribution coincides with income distribution. As investing in education can help secure a certain level of income, Koreans will continue to invest more and more into their and their children’s education. Nevertheless, it is uncertain whether the current structure of education-based income distribution is permanent, as people study for only so many years at colleges and universities, and therefore their earnings can change significantly over time.
The Korean economy has been growing dramatically since the 1960s, and a key issue in a growing economy is the degree to which economic development is actually benefitting citizens in the form of increasing income. Until now, Korea has managed to ensure the stability of income distribution while continuing its extraordinary growth, but the fairness of income distribution remains a crucial issue to Koreans. As the five-year economic development plans also emphasize the equity of income distribution, we need to continue research on this and related subjects. Korean policymakers will have to judiciously select methods of ensuring greater fairness in income distribution, including increasing taxes, stabilizing the prices of grains and public services, and reducing production costs to help businesses maximize their productivity.