Why Does Inequality in South Korea Continue to Rise?

Abstract

This paper explores the causes of the increasing inequality in family income in South Korea, identifying globalization, population change, and family system change as major causes. Globalization, as an exogenous socio-economic factor, including the 1997 financial crisis and the 2008 subprime mortgage crisis, has drastically transformed South Korea’s economic system and labor market, triggering the dissolution of the patriarchal family system through mass unemployment and increased precarious employment. Changes in the population and the family system, as endogenous socio-economic dynamics, have led to the rise of the single family through divorce and population ageing. These changes have contributed to the rapid increase in family income inequality because single families are vulnerable to the social risk of poverty and the elderly cohort has the highest rate of poverty due to underdeveloped social safety nets in South Korea. In the 2000s, these factors have simultaneously led to inequality in South Korea continuing to rise.