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Population ageing and income inequality

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  • Hwang, Seokchae
  • Choe, Chung
  • Choi, Koangsung

Abstract

Population ageing continues to progress at a rapid pace in South Korea. In this paper, we measure the effects of ageing on income inequality. We apply a novel econometric model, RIF regression methodology, to estimate the effect of marginal substitution between age groups, such as, for instance, a swap between the 35–44 age group (the reference group) and the 65 and older group. Our estimates indicate that the Gini coefficient increases by 0.010–0.022 when 10%p of the reference group is marginally substituted by the 65 and above group. It turns out that, when estimating the effects of population ageing on household income at different income quantiles, ageing decreases household income across the entire income distribution. On the other hand, when we control for individual characteristics, the overall impact of population ageing diminishes, and the household income of higher-income individuals actually increases.

Suggested Citation

  • Hwang, Seokchae & Choe, Chung & Choi, Koangsung, 2021. "Population ageing and income inequality," The Journal of the Economics of Ageing, Elsevier, vol. 20(C).
    • Handle: RePEc:eee:joecag:v:20:y:2021:i:c:s2212828x21000384
    DOI: 10.1016/j.jeoa.2021.100345
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    References listed on IDEAS

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    Cited by:

    1. Md Jamil, Abd Rahim & Law, Siong Hook & Khair-Afham, M.S. & Trinugroho, Irwan, 2024. "Financial inclusion and income inequality in developing countries: The role of aging populations," Research in International Business and Finance, Elsevier, vol. 67(PA).
    2. Ke Zhang & Hao Sun & Xiangyu Li, 2022. "Aging Population Spatial Distribution Discrepancy and Impacting Factor," Sustainability, MDPI, vol. 14(15), pages 1-22, August.
    3. Shaik, Muhammad Raees & Goh, Soo Khoon & Wong, Koi Nyen & Law, Chee Hong, 2024. "Does population aging coexist with income inequality in the long run? Evidence from selected Asia-Pacific countries," Economic Systems, Elsevier, vol. 48(1).

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