The Korean Journal of Economic Studies
Sources of Lifetime Inequality in Korea
Jiwoon Kim (Hongik University)Year 2020Vol. 68No. 1
AbstractThis study quantifies the sources of lifetime wage income inequality, whichis defined as the increase in the within-age-group wage income inequality byage. Sources of lifetime inequality are analyzed based on the life cycle modelthat reflects the endogenous human capital accumulation of Huggett et al.(2011). According to the analysis, the difference in the initial conditions(66.9%) at the time of entry into the labor market has a greater impact on thelifetime wage income inequality than the exogenous labor productivity changeduring the life cycle (33.1%). In particular, it is found that the difference inthe amount of human capital in the initial conditions is most important. Theresults in this study suggest that policy efforts should be made to improvehuman capital through education and welfare policies to alleviate lifetimeincome inequality.