Why Does Inequality Keep Rising In South Korea?

This paper explores the rise of economic inequality in South Korea, focusing on changing income distribution of individuals and families after financial crisis in 1997. In South Korea, the great U-turn of inequality was observed since the early 1990s. Both Gini coefficient of household income inequality of household and Gini coefficient of individual’s wage inequality had decreased commonly until the early 1990s. They have kept rapidly rising earlier than financial crisis in 1997. The financial crisis in 1997 has exacerbated the tendency of the rising income inequality as neoliberal economic reforms, policy measures to resolve the financial-cum-economic crisis, were implemented by the Korean government. Another financial crisis in 2008, triggered by the crisis of the subprime mortgage in the USA, made it harder to roll back the rising inequality. In addition to impacts of globalization, under the poor social welfare system, endogenous social changes such as fast aging of population and family dissolution, partly associated with neoliberal economic reforms, have contributed to the drastic rise of family income inequality in the 2000s.