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`Poverty to Worsen More Than Wealth Inequality in Korea`

`Poverty to Worsen More Than Wealth Inequality in Korea`

Posted July. 14, 2009 09:13,   


The country’s leading state-run think tank yesterday said poverty will pose a bigger problem to Korea than wealth distribution.

The Korea Development Institute said in a study that the size of the low-income class is expanding much faster than the widening wealth gap.

Researcher Yoo Gyeong-jun said the relative poverty rate of urban households rose much faster than the Gini coefficient, which indicates the level of income inequality. “Though the relative poverty rate and income inequality generally move hand in hand, Korea, Japan and Spain have shown a steeper rise in their relative poverty rates.”

The relative poverty rate indicates the percentage of households with income less than half of the median household income. Last year, the share of households earning less than half (1.77 million won or 1,353 U.S. dollars) of the median monthly income (3.54 million won or 2,700 dollars) was 14.3 percent.

“Korea’s relative poverty rate is much higher than the Organization for Economic Cooperation and Development average and shows that the lower-income class has not properly benefited from Korea’s economic growth. The previous administration made it a policy goal to address problems arising from wealth distribution, but its efforts have in essence failed.”

The relative poverty rate peaked in 1999 immediately after the Asian financial crisis at 12.8 percent. It dropped temporarily in 2000, but rose yet again to 14 percent between 2006 and last year.

Income inequality has also shown a steady rise after falling from the peak of 0.323 in 1999 to 0.299 in 2000. Last year, the figure reached 0.321.