The Effect of Population Structure Changes on Inequality

Abstract

□ IMF 경제위기 이후 심화한 소득불평등의 경향이 사회경제적 요인 외에 저출산, 고령화로 대표되는 인구구조 변화에 의해 어떤 영향을 받을 것인지를 실증분석 □ 소득불평등에 대한 정책수립에 있어서 사회경제적 접근법뿐만 아니라 인구학적 접근법을 같이 고려할 수 있도록 함으로써 최적의 정책조합 수립 참고

Two socio-economic changes have been prominent in Korea over the past 20 years. First, the household structure has changed. The average household size has declined dramatically, with the proportion of elderly households and of households with no children growing. Second, income inequality has been on a constant rise. The aim of this report is to investigate whether the change of household structure has affected the change in income distribution. We attempted to quantify the effect of household changes on income inequality using re-weighting and decomposition. To assess the impact of the changing household structure between 1990 and 2011, we need to compare the counterfactual distribution of 2011 income and 1990 household structure with the actual 2011 income distribution. The Generalized Entrophy (GE) index can be decomposed as the sum of inequality within and between population subgroups. By the dynamic decomposition, we can distinguish between inequality changes within and between population subgroups. Our results show that the income inequality would have been lower if the household structure were kept unchanged. This means that the changes of household structure has influenced on the income distribution in Korea. This results suggest that a more effective income distribution policy can be made integrating policies on income redistribution and other population issues.