Most equal before taxes, but income ranks 22nd after taxes
An analysis of OECD income distribution statistics by Yonhap News on the 20th showed that, as of 2023, Korea's improvement rate between its pre-tax (market income) and post-tax (disposable income) Gini coefficients was 17.6%, ranking 28th among the 29 member countries with published statistics. This is only half the OECD member average of 34.4%, and the only country below Korea was Costa Rica (12.1%). Including non-members Bulgaria, Croatia, and Romania, Korea ranked 31st out of 32 countries.
The Gini coefficient indicates greater equality as it approaches 0 and greater inequality as it approaches 1. The improvement rate is calculated by comparing the market income Gini coefficient with the disposable income Gini coefficient after redistribution policies such as taxes, pensions, and welfare. Korea's 2023 market income Gini coefficient was 0.392, the most equal among all countries, but its disposable income Gini coefficient was 0.323, leaving it in 22nd place.
Slovakia topped the 2023 income redistribution improvement rankings, lowering its market income Gini coefficient from 0.413 to 0.213 for an improvement rate of 48.3%. European countries filled the upper ranks, including Belgium (47.7%), Finland (47.2%), and the Czech Republic (43.5%). The United Kingdom posted 29.7%, ranking 22nd, while the United States recorded 22.1%, ranking 26th.
Korea's low ranking has been a persistent pattern. Its improvement rate ranked 23rd out of 26 countries in 2011, 31st out of 33 in 2018, and 28th out of 29 in 2023. According to Statistics Korea's Survey of Household Finances and Living Conditions, the 2024 improvement rate was 18.5%, slightly higher than 2023's 17.6%.
The gap is even wider among the elderly. Korea's income redistribution improvement rate for those aged 18-65 was 13.7%, ranking 27th among the 29 OECD member countries, while for those 66 and older it was 29.6%, ranking 28th. The OECD averages were 24.8% and 57.1%, respectively. Korea's market income Gini coefficient for those 66 and older was 0.540, the second most equal among 29 countries, but its disposable income Gini coefficient was 0.380, ranking 27th. This was a drop of 25 places, the largest among the 29 countries.
The reduction in the Gini coefficient from market income to disposable income was also 0.160, only 38% of the OECD average (0.420) and the lowest among the 29 countries. By contrast, Austria lowered its market income Gini coefficient from 0.871 to 0.306, while Belgium and the Czech Republic also saw drops to 0.222 and 0.200, respectively. In Europe, public pensions replace income after retirement, but in Korea, the elderly continue to work.
Kang Sung-jin, a professor of economics at Korea University, pointed out, "Korea's market income itself is relatively equitable," adding, "The problem is that the government's social safety net and pension system for improving income distribution do not fit the target groups." He suggested, "Universal welfare was introduced too quickly, while tailored, selective welfare remains relatively weak," noting that "there is a need to strengthen tailored welfare that selects and supports low-income groups for the time being."
Kim Kwang-seok, head of the Economic Research Office at the Korea Economic Research Institute, noted, "This means that income redistribution through taxation and other systems plays a weaker role here than in other countries," adding, "Public transfer income fundamentally needs to be reinforced, and a safety net is needed for vulnerable groups living below basic subsistence levels."
