Household characteristics at the bottom, the typical, and the top of the 2016 income distribution in South Korea: A quantile regression analysis

This paper seeks understanding how demographic characteristics affect the different quantiles of the South Korean income distribution. Findings from the 2016 Household Income and Expenditure Survey data suggest that, at the bottom of the distribution, households relied heavily on cash transfers from institutions and other households, while those at the top relied more on wages, suggesting that high-income households in South Korea were not members of the "propertied class." We then develop simple empirical models to measure the effect of demographic covariates on household income conditional on a number of variables commonly used in inequality studies, including lifecycle, education, gender, marital status, urban residence, job security, industry and occupation type. Quantile regression results demonstrate how a particular quantile of the conditional distribution changes with demographic characteristics. Specifically, we found an increase in gender and unemployment effects as we go from high to low quantiles. Programmes aimed at combating gender discrimination and persistent unemployment therefore are expected to be inequality reducing. This is in contrast to policies to promote higher education or to expand public sector employment that quantile regression models indicate to be inequality enhancing.