Structural transformation and inequality: The case of South Korea

Abstract

This paper examines the relationship between structural transformation and inequality in South Korea from 1963 to 1990. We quantify the impact of structural change, age structure, employment and wage structure, and the distribution of farmland on income inequality. We find that the relatively equal initial distribution of farmland due to an extensive redistributive land reform undertaken in the 1950s significantly constrained subsequent income inequality. Structural change through the reallocation of labor out of agriculture contributed to rising income inequality. By contrast, a greater female labor force participation rate in non-agriculture, and a lower share of the working-age population reduced household income inequality.