Economic inequality in South Korea

Some claim that the gap between the rich and the poor in Korea is not as serious as that in other countries.

In 2019, an article published on Xinhua claimed that the government-led economic growth policy resulted in a drop in South Korea's Gini index from 2018.[7] However, it should be cautioned that the figure has only improved due to sluggish economic growth among high-income earners.

The film, Parasite, released in 2019, depicted drastic economic inequality between South Korea's wealthy and the poor, which is not necessarily reflected in reality.[8] For contrast, 1% of the United States' top income earners earn 20% of the country's income, whereas the ratio is smaller in South Korea, with 12.2% of the population earning the same percentage of South Korea's total income.[8]

Economic inequality is often linked to low or limited social mobility, a situation which may instill a sense of hopelessness among South Korea's youth.[9] Gambling, though extremely limited due to its legality in South Korea, can be a dangerous source of debt for South Koreans who are susceptible to gambling and gambling addiction.[10] In 2017, the availability of cryptocurrrency in South Korea,[11] combined with a lack of legal outlets for gambling, has contributed to gambling problems and associated debt.[12]

Middle and low-income people, who are unable to make ends meet immediately, sympathize with extremism and become mired in political unrest. In this case, there is a possibility of being swayed by populist policies, such as the National Revolutionary Dividend Party set up by Huh Kyung-young in 2020. In fact, many people were tempted and responded to the party's absurd story.

Not only the financial crisis itself, but also the ensuing contraction in domestic investment and worsening overall employment conditions. A slump in the domestic economy and strengthening the nation's economic structure dependent on exports. Before the Asian financial crisis, local companies used to make lax investments, ironically these over-investments had a positive impact on employment.

In the real economy, the imbalance of information results in reverse selection or moral hazard. The efficiency wage theory may be applied to solve the problems arising from this. Then, contrary to conventional wisdom, the phenomenon of "giving more to hardworking people than to work" occurs. It is easy to understand that there is a big difference in prize money even though the difference between first and second place is very small in a big competition. People who are confident of their own skills will prefer a competition with a big prize money because they think 'I can be number one.' It serves as a mechanism to drive out the uncompetitive and attract the competitive. In other words, in theory, the more strictly one considers who is good or bad, the more polarization can be intensified. For now, meritocracy is the clearest and most reasonable resource distribution standard in reality when there is no external pressure, so it is valid both in terms of efficiency and in terms of legitimacy. However, polarization is another matter. In other words, a legitimate society can be more polarized, and the oppositely unjust society can be called a more equal society. Simply saying that polarization is severe cannot determine that society is unjust.

In his book The Great Leveler, Schaedel said that political inequality creates economic inequality.[13] In the book, the author said, "As the nation has historically been formed, public power has been concentrated on a few people. In terms of hierarchy, it is a very sharp spire structure. These political inequalities have encouraged economic inequality," The Republic of Korea says that economic inequality has intensified since the 1990s as well as political inequality.

In the 2016 Hanyang University dissertation, a survey was conducted on the perception of economic inequality among generations. In the paper, 70 percent of the people held the government responsible for failing to narrow the income gap. So many modern people say that the current government's policy inequality is not helping to bridge the gap between the rich and the poor.[14]

The poverty of low-income people is getting worse due to the long-term deterioration of employment in South Korea. Therefore, the government has tried to increase employment every time over the past few years, but no results have been made yet.[15] In an article published in the 2018 Korean Times, the IMF said Korea's income inequality was the poorest among 22 Asian-Pacific countries. In this article, the nation's economic growth is growing fast, but it also talked about inequality in household income due to the difficulty of finding jobs for young job seekers.[16]