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A Political Economic Analysis of Korean Reunification, Migration and Income Redistribution (in Korean)


  • Weh-Sol Moon

    (Department of Economics, Seoul Women’s University)


This paper examines two different reunification regimes and investigates the decision making problems on tax and income transfers in a political economy model. The first reunification regime is the South-Driven regime under which the majority of South Korea choose the tax rate, the amount of transfers and the size of migration. The second is the North-Participation regime under which there is no limit on migration and the majority of Unified Korea choose the tax rate and the amount of transfers. In both regimes, Northern residents’ migration decisions are endogenous and those who decide not to migrate to the Southern region have an alternative to declare fiscal independence of income redistribution taking place within the North independently. This paper shows that there is no income redistribution in a politico-economic equilibrium under the South-Driven regime. Given that, those remaining in the Northern region decide to declare fiscal independence. On the other hand, the North-Participation regime delivers an equilibrium supporting income redistribution and no fiscal independence.

Suggested Citation

  • Weh-Sol Moon, 2020. "A Political Economic Analysis of Korean Reunification, Migration and Income Redistribution (in Korean)," Economic Analysis (Quarterly), Economic Research Institute, Bank of Korea, vol. 26(1), pages 34-83, March.
  • Handle: RePEc:bok:journl:v:26:y:2020:i:1:p:34-83

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    More about this item


    Korean Reunification; Migration; Income Redistribution;
    All these keywords.

    JEL classification:

    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers


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