Income inequality in S. Korea is widening at second-fastest rate in OECD

Posted on : 2023-04-10 16:40 KST Modified on : 2023-04-10 16:40 KST
The highest-earning 1% of South Koreans accounted for 11.7% of income as of 2021, a Hankyoreh analysis shows
A person waiting in line at a soup kitchen in Anyang on Oct. 5, 2022, turns back to see what that day’s lunch bag held. (Park Jong-sik/The Hankyoreh)
A person waiting in line at a soup kitchen in Anyang on Oct. 5, 2022, turns back to see what that day’s lunch bag held. (Park Jong-sik/The Hankyoreh)

Income inequality in South Korea is rising at one of the fastest rates of any member of the Organisation for Economic Co-operation and Development (OECD), statistics show.

In an analysis of income inequality data for different countries provided by the World Inequality Lab as of March 2023, the Hankyoreh found that the highest-earning 1% of South Koreans accounted for 11.7% of income as of 2021 — an increase of 3.3 percentage points since 2007.

This was the second-largest increase among the 30 OECD member states for which a comparison was available. Mexico was in first place at 8.7 percentage points.

The highest-earning 10% accounted for 34.4% of income, up by 2.5 percentage points over the same period. That rate of increase was the fourth largest among OECD members.

The only countries where the rate of increase in earnings for the top 10% was higher than in South Korea were New Zealand (4.5 percentage points), Denmark (3.8), and Türkiye (3.3).

When the highest-earning brackets in a country account for a larger share of income, that means a lower share for the middle and lower brackets, indicating that income is not being evenly distributed.

The income percentages used in the analysis represented the shares of the highest-earning 1% and 10% out of pretax national income based on taxation data, national accounts, and other sources.

The top brackets’ share of income was found to have increased during times of financial crisis.

An examination of changes in income concentration associated with financial crisis conditions between 2007 and 2011 showed South Korea accounting for the largest rise in the share of income for the highest-earning 10% at 3.0 percentage points. It was followed by Türkiye (2.6), New Zealand (2.5), and Mexico (1.4).

Over the same period, the share represented by the highest-earning 1% increased by 1.9 percentage points, the third-largest rise after Mexico (8.3) and Türkiye (2.0).

The World Inequality Lab assembles over 100 economists from around the world, including Paris School of Economics professor Thomas Piketty, to collaborate on publishing inequality data for different countries.

By Ryu Yi-geun, staff reporter

Please direct questions or comments to [english@hani.co.kr]

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