The Implications of Polarization in Multidimensional Aspects for Social Policy

Abstract

Using the Korea Welfare Panel Survey, this study explores the polarization of income, assets, and labor market participation by education level. The income gap between two groups of different education levels in the 1st income quintile increased from about 1.53 million won in 2006 to 4.094 million won in 2020; the gap in disposable income between the two education groups increased from about 1.01 million won to 5.316 million won in 2020. In the composition by education level within the same quintile, the proportion of those with less than a high school diploma in the quintile with low income and assets was higher than that of those with a college diploma or a higher degree. The high-income quintile has a high share of college graduates or higher, and there is a large gap by education level within the same quintile. In terms of education level, participation in major economic activities, and workplace size, there are differences by level of education even if participants participate in the same economic activity and the workplace size is within the same decile. The same is true in 2006 as well as in 2020. On the other hand, the gap between the low and high quintiles showed that market income increased over time while disposable income slightly decreased, suggesting that public transfers, taxes, and social insurance contributions had a positive effect on bridging the gap.