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Changing Inequalities and Societal Impacts in Rich CountriesThirty Countries' Experiences$
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Brian Nolan, Wiemer Salverda, Daniele Checchi, Ive Marx, Abigail McKnight, István György Tóth, and Herman G. van de Werfhorst

Print publication date: 2014

Print ISBN-13: 9780199687428

Published to Oxford Scholarship Online: April 2014

DOI: 10.1093/acprof:oso/9780199687428.001.0001

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The Great U-Turn in Inequality and the Need for Social Security Provisions

(p.415) Chapter 18 Korea
Changing Inequalities and Societal Impacts in Rich Countries

Byung You Cheon

Jiyeun Chang

Gyu Seong Hwang

Jin-Wook Shin

Shin-Wook Kang

Byung-Hee Lee

Hyun Joo Kim

Oxford University Press

Korean income inequality followed a U-shaped path: falling up to 1992 and soaring after the crisis of 1997. Relatively balanced income inequality accommodated very high individual wage inequality without recourse to a social security system, thanks to growing employment and hours worked of lower-income households and extension of their educational opportunities. After growth faltered, labour market ‘dualization’, stagnating employment rates, and increasing numbers of non-regular workers led to growing inequality, resulting in higher crime and suicide rates and lower marriage and fertility rates, and undermining the social system that had backed the rapid growth. Establishment of a social security system, needed for further development since the 1990s, has produced social policies, a basic social assistance programme, a national pension plan, and unemployment insurance, but insufficient for containing growing inequality in market incomes. Social expenditure has to rise and needs to go together with the creation of ‘good’ jobs.

Keywords:   income inequality, Asian crisis, wage inequality, family formation, Korea, non-regular workers, crime, fertility, suicide, social security

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