'Top 20%-Bottom 20%' Income Gap Increased by 668,000 Won in One Year

[Asia Economy Reporter Joo Sang-don] The degree of income inequality has worsened. In the first quarter of this year, the income gap between the top 20% and the bottom 20% widened by more than 660,000 KRW.

According to Statistics Korea on the 23rd, as of the first quarter of this year, the income difference between the 5th quintile (top 20%) and the 1st quintile (bottom 20%) was 9.96 million KRW, which is 668,000 KRW larger than the same period last year (8.992 million KRW).

As the income gap between these groups expanded, the income quintile ratio also increased. The first quarter's equivalized disposable income 5th quintile ratio was 5.41 times, up 0.23 points from 5.18 times in the first quarter of last year.

The income 5th quintile ratio is the value obtained by dividing the equivalized disposable income of the top 20% (5th quintile) by that of the bottom 20% (1st quintile). A higher value indicates a more severe degree of income inequality.

A Statistics Korea official explained, "The deterioration in income distribution is due to differing growth rates of earned income and business income, which account for the largest share of current income, across income quintiles. The lower growth rate of employment sector income, which combines earned and business income, in the low-income quintiles appears to have contributed to the overall worsening of income distribution compared to the same period last year, despite the expansion of public transfer income."

The first quarter 5th quintile ratio cannot be directly compared with previous figures because since January last year, Statistics Korea has been conducting integrated surveys on income and expenditure for about 7,200 sample households nationwide. However, in 2019, both the existing survey results and integrated results were published together. According to the existing survey, the 2019 first quarter income 5th quintile ratio was 5.8 times. This indicates that income inequality had eased compared to the first quarter of 2018 (5.95 times) but worsened again this year.

The growth rate of "disposable income," which is the amount left after subtracting non-consumption expenditures from income and can be used for consumption expenditure and savings, was steeper for the 5th quintile. The 1st quintile's disposable income was 1.234 million KRW, a 3.9% increase from the same period last year, whereas the 5th quintile's disposable income surged by 8.3% to 8.768 million KRW.

The deficit household ratio, which is the proportion of households whose consumption expenditure exceeds disposable income, increased for the 1st quintile but decreased for the 5th quintile. Generally, the lower the income quintile, the higher the deficit household ratio because consumption expenditure exceeds disposable income. However, the problem is that this ratio is rising for the 1st quintile and falling for the 5th quintile. The deficit household ratio for the 1st quintile rose from 46.0% in the second quarter of last year to 49.8% in the third quarter, 51.6% in the fourth quarter, and 53.0% in the first quarter of this year. Conversely, for the 5th quintile, it decreased from 12.0% → 11.3% → 9.2% → 7.9% during the same period.

This content was produced with the assistance of AI translation services.