The Korean Journal of Economic Studies
Income Inequality in Korea in the Post Global Financial Crisis Period
Jemin Choi (Korea Institute of Finance), Sunghyun Kim (Sungkyunkwan University) and Sangyeon Park (Korea Institute of Finance)Year 2018Vol. 66No. 1
AbstractThis paper calculates Gini coefficient using the KLIPS (Korean Labor &Income Panel Study) data to evaluate how income inequality has changed inKorea during 1997-2014. We decompose the Gini coefficient by its incomesources to examine marginal effects from different income sources. Unlike theofficial Gini coefficient based on the HIES (Household Income and ExpenditureSurvey) which has been continuously declining (improvement of inequality)since the global financial crisis, the newly calculated Gini coefficient hasdeclined and then increased during 2012-13. Korea is ranked 8th in incomeinequality among OECD countries in this new statistic. Gini coefficientdecomposition by its income source shows that the decline in income inequalityis due to a smaller negative impact of real estate and financial income and alarger positive effect from transfer income and social security income onimproving income inequality. However, labor income’s marginal effect on theGini coefficient has changed from negative to positive over the global financialcrisis period, which has contribute to the increase in income inequality.Therefore, the decline in Gini coefficient after the financial crisis does notnecessarily mean an improvement in perceived income inequality.