Income Distribution in Korea: Empirical Evidence from OECD Guideline

We empirically show the level of income distribution in Korea, by using National Survey of Family Income and Expenditure Data in 1991 and 1996 from Korea National Statistical Office. We find that the level of income distribution before redistributive policies in Korea was moderate, and was deteriorated over 5 years. However, its level was improved over the times, after redistributive policies were activated. The structure of income sources for total income inequality is quite different between two time periods. However, we hesitate to insist some change in structure of income sources, as our dataset might have inconsistency in population and sampling technique. Government policy has an interesting implication on income redistribution. Public transfer policy does not have significant impact on reducing the level of income inequality. However, tax policy has a redistributive impact. The relative impact of tax policy on income redistribution is especially strong. Therefore, tax policy can have an important role in reducing the level of income inequality, when it is well designed.