A research report indicates that the disparity in household incomes, which had previously shown a decreasing pattern, has started to increase once more. According to the Bank of Korea, the South Korean economy is experiencing "complicated polarization," with both wealth and income inequalities growing.
The wealth disparity has increased because of higher property costs, while income inequality has grown due to "K-shaped recovery," with economic expansion focused mainly on chip production firms.
On the 10th, the Bank of Korea disclosed in its publication called *Current Status and Ripple Effects of Household Polarization in the Korean Economy* that the income Gini coefficient (calculated using disposable income) dropped from 0.353 in 2016 to 0.323 in 2023, though it increased marginally to 0.325 in 2024.
The Gini coefficient tends toward 0 when there is perfect equality and reaches 1 when there is complete inequality. A value above 0.4 typically indicates significant disparity within a society. The number increased marginally from 0.328 in 2020 to 0.329 in 2021, then decreased steadily before rising once more in 2024 following a three-year period of reduction.
Lee Jae-ho, leader of the Bank of Korea's investigative group, stated, "Indications suggest that the wealth disparity is once more expanding because of K-shaped development within various sectors," noting, "The risk of job replacement caused by the rise of artificial intelligence (AI) might heighten economic imbalance going forward, potentially reinforcing current disparities in assets."
As per the report, the net wealth Gini coefficient decreased to 0.584 in 2017 but quickly increased to 0.625 by 2025. Since real estate constitutes the majority of family assets and is mainly held by older individuals, intergenerational wealth inequality has turned into a structural issue.
The Bank of Korea noted that with rising income disparity and growing wealth concentration, the financial condition of homeless individuals and those with limited earnings is worsening. The percentage of young adults (those in their 20s and 30s) within the bottom fifth of both net worth and income groups almost doubled between 2020 and 2025, increasing from 7.9% to 15.2%. Specifically, only the share of individuals aged 20 to 30 within this group has risen.
The Bank of Korea cautioned that the economic base focused on low-income younger families is deteriorating, potentially reducing consumer activity and production efficiency. This occurs as higher-income individuals with significant wealth have less impact on increasing consumption, and older people, who own property, face constraints in converting their assets into spendable cash.
Based on a national panel data study, when the wealth proportion held by the top 10% rises by one percentage point, total factor productivity decreases by 0.16% after two years. Total factor productivity reflects the extent to which a nation's technological advancement, educational standards, and institutional effectiveness support economic expansion.
Lee stated, "The process of aging is increasing efficiency problems via 'older generations passing wealth to older offspring,' with individuals in their 80s transferring resources to those in their 60s," and highlighted, "Current redistributive measures aimed at maintaining income have shortcomings; therefore, it is important to enhance the emerging industrial system to make sure economic growth advantages are solidly embedded throughout the economy."
