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The financial crisis and income distribution in Korea : The role of income tax policy

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  • The financial crisis and income distribution in Korea
  • Hyun, Jin Kwon; Lim, Byung-In
  • The Association of Korean Economic Studies


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Title The financial crisis and income distribution in Korea
Similar Titles
Sub Title

The role of income tax policy

Material Type Articles
Author(English)

Hyun, Jin Kwon; Lim, Byung-In

Publisher

[Seoul]:The Association of Korean Economic Studies

Date 2005
Journal Title; Vol./Issue The Journal of the Korean Economy:vol. 6(no. 1)
Pages 15
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Financial Policy
Economy < Economic Conditions
Holding AKES

Abstract

We empirically examine the impact of the financial crisis at the end of 1997 on income inequality in Korea. We also find the role of income tax policy on reducing the level of income inequality. The income inequality became serious after the financial crisis, with the Gini coefficient of 0.3368 in 1996 and 0.4008 in 2000. Especially, poor group was increased from 4.7% in 1996 to 6.6% in 2000. The redistributive effect of income tax was relatively low, as it has too low average tax rate, irrespective of high progressivity. The most serious problem was too high level of horizontal inequity with unequal tax treatment of equal income groups. Horizontal inequity with classical notion was the most serious in 1996, as it allowed too much deductions and exemptions at that time. The degree of income inequality was much worse in 2000, but the horizontal equity was improved. (The rest omitted)