The Effects of Economic Openness on Korea’s Income Distribution

Abstract

As global liberalization has progressed over the past few decades, the income gap between countries has declined gradually but income distribution within the country has continued to deteriorate. As income inequality became a social issue, external causes such as free trade, immigration, and international capital movements began to attract attention. Although Korea is a significant beneficiary country of free trade, public support for free trade has weakened. The official statistics on Korea’s income inequality are known to be underestimated. The adjusted income inequality of Korea is lower than that of the United States, but somewhat higher than those of Europe and Japan. Although household survey, firm survey, and income tax data show differences in the level of income inequality, they show the same trends: inequality has risen since the mid-1990s, but has been declining or stagnating since the beginning of 2010.