Youth Face Widening Wealth and Income Gaps

Analysis indicates that young people are facing increasing economic hardship due to rising real estate prices and changes in industrial structure. The Bank of Korea, in its report titled 'The State and Impact of Household Polarization in Our Economy' released on the 11th, revealed signs of expanding inequality not only in assets but also in income.

Specifically, the Gini coefficient, an indicator of income inequality, which had been decreasing since 2021, rose again in 2024. According to the report, the proportion of young people aged 20-30 within households in the bottom 20% (first quintile) for both net assets and income increased from 7.9% in 2020 to 15.2% in 2025. This increase in proportion was observed only among young people in their 20s and 30s, across all age groups.

A characteristic aspect of recent income polarization is that wage gaps, which were previously driven by employment types, are now becoming prominent between industries. The spread of Artificial Intelligence (AI) technology is likely to become a factor widening the income gap by potentially replacing jobs held by low-income individuals and young people.

As wealth and income polarization widens, concerns are rising that overall economic productivity will decline, negatively impacting Korea's economic growth. The Bank of Korea explained that a 1 percentage point increase in the asset share held by the top 10% leads to a 0.16% decrease in total factor productivity two years later.

The Bank of Korea recommended improving the household asset structure, which is currently centered on real estate, and guiding funds towards productive sectors. It also emphasized redesigning the redistribution system to disseminate the benefits of technological advancement and strengthening vocational training support.