Korea’s income inequality is high up in the ranking among Organization for Economic Cooperation & Development member countries.(image: winnifredxoxo/flickr)
SEOUL, June 17 (Korea Bizwire) – The income of average Koreans has doubled for the past 20 or so years but the degree of income inequality has increased further for the same period. According to the National Statistical Office and the Korea Customs Service on June 15, the monthly real income of Korea’s urban households rose 85.4 percent to 3,904,000 won last year from 2,106,000 won in 1990.
But the income equality for urban families has worsened in terms of the Gini coefficient, which increased to 0.280 in 2013 from 0.256 in 1990. If the analysis was extended to all households in the nation, the coefficient would rise further to 0.302. A Gini coefficient of zero expresses perfect equality, where all values are the same. A Gini coefficient of one expresses maximal inequality among values.
Korea’s income inequality is high up in the ranking among Organization for Economic Cooperation & Development member countries. According to a study by the Korea Institute for International Economic Policy commissioned by the International Labor Organization comparing the Gini coefficients of 77 nations, Korea was the eighth highest among the 28 richest nations during the 27-year period between 1981 and 2007.
The speed at which income inequality deepens is also high. According to a study by the Asian Development Bank based on data on 28 Asian nations between 1990 and 2010, Korea’s Gini coefficient growth rate was fifth highest among Asian countries after China, Indonesia, Laos, and Sri Lanka.
Under these circumstances, major international organizations such as the International Monetary Fund and the Organization for Economic Cooperation & Development put out warnings against the widening income gap.
In a report published in March, the IMF said, “The widening income difference may hurt national economic growth” and suggested ways to remedy the situation by raising taxes on real estate properties.
The OECD followed up with a report in May that the income share of the top 1 percent population in 18 OECD member countries increased to 9.7 percent in 2012 from 6.5 percent in 1981 and that a tax reform be introduced to ameliorate the situation.
Written by Sean Chung (schung10@koreabizwire.com)
Money (Follow us@Moneynews_Korea)
