Intragenerational Income Mobility in Korea

Over the past 20 years, many Asian countries have experienced rapid economic growth. However, these achievements have come with costs including downward mobility, increasing inequality, and worsening social cohesion. Using Korea’s case, we intend to measure income mobility in Korea and to identify the determinants of income ranks and mobility in Korea. Empirical outcomes using the KLIP’s labor panel data from 1998 to 2010 revealed that the determinants of income distribution are age, gender, health conditions, employment status, marital status, and previous income level and income mobility is quite limited for both the poorest and the richest income quartile households. This implies that household earnings are not convergent and income disparity tends to grow in Korea. In addition, a macro economic shock was found to cause heterogeneous impacts on each income group and the income of the low-income class was highly vulnerable to it. Given the long-lasting impact of the early stage factors and initial endowment on income and the existence of senior poverty, this paper calls for policies to support citizens suffered from illness, family breakdown, poor initial conditions, or graying.