Globalization and Income Inequality in South Korea: The Sweeping Land Reform and Inequality during Rapid Globalization

Along with Japan and Taiwan, South Korea prides itself on the low GINI coefficient it has maintained during rapid economic development due to the sweeping land reform. In addition to the rural bias with its infamous income redistribution policy that tried to balance the widening urban and rural income gap, the sweeping land reform allowed landowning farmers to invest large sums of private funds in education for their children. However, behind the veil of the low GINI coefficient in South Korea was the burgeoning class differentiation of people according to their home regions, gender, and occupational classifications due to the rapid urbanization that commenced from the early 1970s. The ensued globalization since the 1990s further reinforced income inequality between urban and rural residents on the one hand and between affluent and backward regions on the other, including the usual class polarization in urban areas. Status distinctions through global educational credentials also emerged for the first time through the globalization of educational opportunities. Nonetheless, the overall GINI coefficient for South Korea is substantially lower than other emerging markets, while it is close to the OECD average without any comparable OECD redistribution policies. This study investigates the enduring impact of the sweeping land reform and the rural bias in South Korea on its widening inequality due to urbanization and globalization. This study argues that the land reform and rural bias are not easily found in Western societies, as they together produce unexpected consequences of persuading people to invest more in education than others (i.e., equalizing effects), although educational fervor induces stiff competition among educational attainers in the job market (i.e., differentiating effects). The paper then discusses suggestions for future improvements.