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Shrinking Middle Class and Changing Income Distribution of Korea: 1995-2005

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  • Joon-Woo Nahm

    (Sogang University)

Abstract

This paper investigates the shrinking middle class hypothesis and reveals more details about recent trends in income distribution of Korea from 1995 to 2005. We find that the consensus view of a declining middle class is correct and the decline in the middle class splited equally into the lower class and the upper class in Korea. Furthermore, while the size and income share of the middle class declined, the share of the upper class increased rapidly and the share of the lower class remained stable over time. We then move beyond cross-sectional analyses to examine how the mobility of workers and families changed over this period. We present clues for who moved out of the middle class and the source of such changes using an ordered probit regression model.

Suggested Citation

  • Joon-Woo Nahm, 2008. "Shrinking Middle Class and Changing Income Distribution of Korea: 1995-2005," Korean Economic Review, Korean Economic Association, vol. 24, pages 345-365.
  • Handle: RePEc:kea:keappr:ker-20081231-24-2-02
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    File URL: http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-20081231-24-2-02.pdf
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    References listed on IDEAS

    as
    1. Joan Esteban & Carlos Gradin & Debraj Ray, 1999. "Extensions of a Measure of Polarization with an Application to the Income Distribution of Five OECD Countries," LIS Working papers 218, LIS Cross-National Data Center in Luxembourg.
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    3. Hall, Peter & Horowitz, Joel L, 1996. "Bootstrap Critical Values for Tests Based on Generalized-Method-of-Moments Estimators," Econometrica, Econometric Society, vol. 64(4), pages 891-916, July.
    4. Jenkins, Stephen P., 1995. "Did the middle class shrink during the 1980s? UK evidence from kernel density estimates," Economics Letters, Elsevier, vol. 49(4), pages 407-413, October.
    5. Wolfson, Michael, 1997. "Divergent Inequalities - Theory and Empirical Results (Revised Edition)," Analytical Studies Branch Research Paper Series 1997066e, Statistics Canada, Analytical Studies Branch.
    6. Carlos Gradín & Máximo Rossi, 2006. "Income distribution and income sources in Uruguay," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 49-69, May.
    7. Wolfson, Michael C, 1997. "Divergent Inequalities: Theory and Empirical Results," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(4), pages 401-421, December.
    8. Joel L. Horowitz, 1996. "Bootstrap Critical Values for Tests Based on the Smoothed Maximum Score Estimator," Econometrics 9603003, University Library of Munich, Germany.
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    Citations

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    Cited by:

    1. Pallab Kumar Ghosh & Jae Yoon Lee, 2016. "Decomposition of Changes in Korean Wage Inequality, 1998–2007," Journal of Labor Research, Springer, vol. 37(1), pages 1-28, March.
    2. repec:eme:ijsepp:ijse-06-2015-0170 is not listed on IDEAS
    3. Vladimir Hlasny, 2017. "Different Faces of Inequality across Asia: Decomposition of Income Gaps across Demographic Groups," LIS Working papers 691, LIS Cross-National Data Center in Luxembourg.
    4. Pallab Ghosh & Jae Lee, 2016. "Decomposition of Changes in Korean Wage Inequality, 1998–2007," Journal of Labor Research, Springer, vol. 37(1), pages 1-28, March.

    More about this item

    Keywords

    Shrinking Middle Class; Polarization; Ordered Response Model;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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