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Shrinking Middle Class and Changing Income Distribution of Korea: 1995-2005

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  • Joon-Woo Nahm

    (Sogang University)

Abstract

This paper investigates the shrinking middle class hypothesis and reveals more details about recent trends in income distribution of Korea from 1995 to 2005. We find that the consensus view of a declining middle class is correct and the decline in the middle class splited equally into the lower class and the upper class in Korea. Furthermore, while the size and income share of the middle class declined, the share of the upper class increased rapidly and the share of the lower class remained stable over time. We then move beyond cross-sectional analyses to examine how the mobility of workers and families changed over this period. We present clues for who moved out of the middle class and the source of such changes using an ordered probit regression model.

Suggested Citation

  • Joon-Woo Nahm, 2008. "Shrinking Middle Class and Changing Income Distribution of Korea: 1995-2005," Korean Economic Review, Korean Economic Association, vol. 24, pages 345-365.
    • Handle: RePEc:kea:keappr:ker-20081231-24-2-02
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    Cited by:

    1. Mariam Shahzadi & Muhammad Faraz Riaz & Sofia Anwar & Samia Nasreen, 2017. "How unequal is the size of middle class in the rural urban areas of Punjab province," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 44(2), pages 253-266, February.
    2. Pallab Ghosh & Jae Lee, 2016. "Decomposition of Changes in Korean Wage Inequality, 1998–2007," Journal of Labor Research, Springer, vol. 37(1), pages 1-28, March.
    3. Vladimir Hlasny, 2017. "Different Faces of Inequality across Asia: Decomposition of Income Gaps across Demographic Groups," LIS Working papers 691, LIS Cross-National Data Center in Luxembourg.
    4. Pallab Kumar Ghosh & Jae Yoon Lee, 2016. "Decomposition of Changes in Korean Wage Inequality, 1998–2007," Journal of Labor Research, Springer, vol. 37(1), pages 1-28, March.

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    More about this item

    Keywords

    Shrinking Middle Class; Polarization; Ordered Response Model;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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