🚨 Income Mobility at Record Low
Today Korean Economic News for Beginners | 2025.10.28
0️⃣ Only 3.5% Move from Bottom 80% to Top 20%, Class Ladder Collapses
📌 "Work Hard and Move Up" Myth Breaks…86% of Top Stay in Place, 70% of Bottom Stay in Place
💬 According to the '2023 Income Mobility Statistics' released by the National Data Authority, only 3.5% of people in the bottom 80% moved to the top 20% in 2022. This is the lowest number since records began, showing that Korea's 'class ladder' has collapsed. Among those in the 1st quintile (bottom 20%), 70.2% stayed in the same position the next year, while 86.3% of the 5th quintile (top 20%) kept their position. Income mobility has been falling for three years since 2019, making inequality a structural problem. Experts say this is caused by wage gaps, real estate wealth inequality, and income instability from an aging population.
1️⃣ Easy to Understand
The belief that "if you work hard, you can have a better life" is getting weaker in our society. Recent statistics show that it has become almost impossible for people with low income to move up to higher income levels.
First, let me explain what 'income quintiles' means. Income quintiles divide all people into 5 groups based on income level. The 1st quintile is the bottom 20% (lowest income), and the 5th quintile is the top 20% (highest income). The 2nd, 3rd, and 4th quintiles are the groups in between.
This statistic is shocking because 'class movement' almost never happens. When we tracked people in the 1st quintile in 2022, 70.2% were still in the 1st quintile one year later. 7 out of 10 people couldn't move to a higher class no matter how hard they tried.
Even more serious is that only 3.5% of people moved from the bottom 80% to the top 20%. Only 3-4 out of 100 people succeeded in "changing their life." In the past, there was hope that "if you study and work hard, you can become middle class," but now that ladder is almost broken.
What about people already in the top 20%? 86.3% of them were still in the top 20% one year later. Once you reach a high class, it's much easier to stay there.
Why does this happen? There are many reasons, but the biggest is 'wealth inequality.' High-income people can invest extra money in real estate or stocks. Someone who owns an apartment in Gangnam, Seoul sees their wealth grow automatically as housing prices rise. They can also give their children better education in good school districts.
On the other hand, low-income people must spend most of their salary on living costs. After paying rent or loan interest, they have almost no money to save. They certainly can't afford to buy real estate or invest in their children's education. As time goes by, the income gap gets wider and wider.
Another problem is that 'good jobs' are disappearing. In the past, if you got a job at a big company or public company, you could live a stable middle-class life. But now these jobs are decreasing, and unstable jobs like temporary workers or contract workers are increasing. Even in the same company, there's a big wage gap between regular workers and temporary workers, and promotion opportunities are different.
Aging also lowers income mobility. As the elderly population with decreasing income grows, more people stay in the lower class. Also, young people find it hard to get jobs and their wages grow slowly, so moving up to middle class is not easy.
This statistic shows that the Korean success story of "work hard and live well" no longer works. Personal effort is important, but structural inequality has become so big that effort alone cannot overcome it.
2️⃣ Economic Terms
📕 Income Mobility
Income mobility is a measure of how much individuals or households move between higher or lower income classes over time.
- High mobility means society has open opportunities and high movement between classes.
- Low mobility means class stratification is serious and the "dirt spoon-gold spoon" structure becomes fixed.
- A healthy society maintains high income mobility, giving everyone a chance to change their class through effort.
📕 Income Quintile
Income quintile divides the entire population into five levels based on income.
- The 1st quintile is the bottom 20% (lowest income class), the 5th quintile is the top 20% (highest income class).
- The 2nd, 3rd, and 4th quintiles are the lower-middle, middle, and upper-middle classes respectively.
- Income quintiles are used to measure inequality and identify policy targets.
📕 Class Stratification
Class stratification is when social and economic status is passed down through generations with almost no movement between classes.
- Parents' income and assets affect their children's education, employment, marriage, and entire life.
- When class stratification worsens, society's vitality decreases and economic growth slows.
- It means a society where "rags to riches" stories disappear and only "parent advantage" is the key to success.
📕 Gini Coefficient
The Gini coefficient measures income inequality on a scale from 0 to 1, where closer to 1 means more inequality.
- 0 means perfect equality (everyone has the same income), 1 means perfect inequality (one person has all income).
- Korea's Gini coefficient keeps rising, showing income inequality is getting worse.
- It's higher than the OECD average, making Korea one of the more unequal developed countries.
3️⃣ Principles and Economic Outlook
✅ Self-Reinforcing Mechanism of Income Inequality
Let's analyze the structural problem where once an income gap opens, it automatically gets bigger.
First, the wealth accumulation gap widens the income gap even more. High-income people can invest money left after living expenses in real estate, stocks, and bonds. For example, someone earning 100 million won a year can spend 50 million won on living and invest the remaining 50 million won. If this money earns 5% per year, they get 2.5 million won in additional income each year. On the other hand, someone earning 30 million won a year spends almost everything on living costs and has almost no money to save. After 10 years, high-income people become richer through wealth growth, while low-income people stay in the same place, and the gap gets bigger.
Second, differences in education investment reproduce inequality between generations. Wealthy families can provide good educational environments for their children. They can live in Gangnam school districts, spend 2-3 million won per month on private lessons, and send their children for study abroad. Children educated this way have a higher chance of going to good universities and getting jobs at big companies or professional positions. On the other hand, low-income children have difficulty getting educational investment, and many must work part-time jobs to earn living expenses, starting from a disadvantaged position. This education gap leads to income gaps in the next generation in a vicious cycle.
Third, differences in networks and information access are also important. High-income people can easily get business networks, investment information, and information about good jobs. "Parent advantage" like "my dad's friend is a company executive and introduced me to an internship opportunity" actually has a big impact on employment and business success. On the other hand, low-income people lack these networks and easily miss good opportunities. They must rely only on public hiring, and they often get investment information late or don't know about it at all.
Once income inequality occurs, it automatically expands and reproduces itself through differences in wealth, education, and networks.
✅ Labor Market Polarization and Declining Job Quality
As good jobs decrease and employment structure becomes polarized, class movement is becoming even more difficult.
First, the wage gap between regular and temporary workers is very large. Even doing similar work at the same company, regular workers earn 50 million won per year while temporary workers earn 30 million won. When you add benefits, retirement pay, and promotion opportunities, the real gap becomes even bigger. The problem is that once you work as a temporary worker, it's very hard to become a regular worker. Companies prefer temporary workers to reduce labor costs, and the ratio of temporary workers keeps increasing. This means 'good jobs' that allow you to move up to middle class are structurally decreasing.
Second, the spread of platform labor and the gig economy has increased employment instability. Jobs where you get paid per task are increasing, like delivery riders, designated drivers, and freelancers. These jobs don't get protection under labor law and don't have employment insurance or retirement pay. Income can be okay when there's a lot of work, but it's unstable, and as you get older it becomes difficult to continue. Even if you earn 3 million won per month from delivery work when young, it's hard to save, and when you reach your 40s-50s, there's a big risk of income dropping sharply due to physical limitations. These jobs solve short-term livelihood but are difficult to use as a stepping stone to move up to middle class in the long term.
Third, the wage gap between big companies and small companies is also widening. New employees at big companies like Samsung Electronics earn over 50 million won per year, but at small companies it's often less than 30 million won. This gap gets bigger as you gain experience. The problem is that big company jobs are very few and most people must work at small companies. No matter how hard you work at a small company, it's difficult to earn as much as big company employees, and moving up to middle class is also hard. This structural gap is a major cause of declining income mobility.
Labor market polarization creates a structure where the 'starting line' determined from birth, regardless of personal effort, determines the outcome.
✅ Decisive Impact of Real Estate Wealth Gap
Real estate wealth inequality is much more serious than income inequality and has become the biggest barrier to class movement.
First, the wealth gap widened rapidly due to rising real estate prices. People who bought Gangnam apartments in Seoul in the early 2000s have experienced wealth growth of over 1 billion won now. This is an amount that's hard for ordinary office workers to save even in 30 years. On the other hand, people who couldn't buy houses had to pay monthly rent or jeonse deposit, and that money didn't accumulate as wealth. As the wealth gap opened by hundreds of millions to billions of won depending on whether you own real estate, the gap between those with real estate and those without became impossibly large to fill.
Second, real estate wealth is the key means of passing wealth to the next generation. Wealthy parents can buy houses for their children when they marry or help with down payments. Children who start this way succeed in owning homes, can save without housing cost burden, and their wealth grows as housing prices rise. On the other hand, people without parental support live in jeonse or monthly rent even after marriage and find it hard to save a large sum of money. If you live in a jeonse house worth 500 million won in Seoul, you must raise the jeonse deposit every 2 years and also bear moving costs. Even doing the same work, children's economic starting line is completely different depending on whether their parents have real estate wealth.
Third, without real estate wealth, preparing for old age is also difficult. In Korea, the national pension alone is not enough for old age living, so many people use real estate as a means to prepare for old age. People with houses can sell their house in old age or use reverse mortgage for living expenses, but people without houses must continue to pay monthly rent. If you have no income after age 65 but must pay monthly rent every month, there's a very high risk of falling into poverty. Real estate wealth has become the key variable determining poverty in old age.
The real estate wealth gap is not just a property difference but a structural barrier that fixes intergenerational inequality and makes class movement almost impossible.
✅ Policy Direction and Social Challenges
Let's comprehensively look at the policy approaches and social challenges needed to restore income mobility.
First, income redistribution through tax policy needs to be strengthened. Taxes on high-income people and big companies should be increased, and that money should be used to increase support for low-income people. For example, the highest income tax rate could be raised or a wealth tax could be created to reduce extreme wealth concentration. At the same time, programs like the Earned Income Tax Credit (EITC) and child tax credit should be expanded to increase the real income of low-wage workers. Also, inheritance and gift taxes should be strengthened to prevent wealth from passing between generations and achieve equality of opportunity. However, these policies may face opposition from high-income people, so social consensus is important.
Second, a fair starting line must be guaranteed in education and housing. Public education should be strengthened so all children can receive quality education regardless of income. The gap between Gangnam school districts and rural schools should be reduced, and scholarships and mentoring should be provided to low-income students to expand educational opportunities. To reduce housing burden, public rental housing should be greatly increased, and low-interest loans for youth and newlyweds should be expanded. When housing costs decrease, savings ability increases, helping with wealth formation. It's especially important to create an environment where young people can live stably without parental support when they become independent.
Third, good jobs must be increased through labor market reform. Conversion of temporary workers to regular workers should be promoted, and the principle of equal pay for equal work should be strengthened. Employment insurance and industrial accident insurance should be applied to platform workers to expand the social safety net. To improve wages and working conditions at small companies, unfair trade between big companies and small companies should be regulated, and support for small companies should be increased. Also, creating quality jobs through nurturing new industries is important. Investment in future industries like AI, bio, and green energy should be made to create opportunities for young generations to get good jobs.
Restoring income mobility requires comprehensive and long-term policy efforts across taxes, education, housing, and the labor market.
4️⃣ In Conclusion
Korea's record low income mobility is not just a statistic but a warning that the 'ladder of opportunity' has collapsed. The fact that the probability of moving from the bottom 80% to the top 20% is only 3.5% shows that the Korean growth myth of "work hard and succeed" no longer works.
The root cause of this phenomenon is the self-reinforcing mechanism of income inequality. High-income people continue to accumulate wealth through asset investment, children's education, and network utilization, while low-income people find it hard to form assets due to living cost burdens and have nothing to pass on to the next generation. Real estate wealth gap plays a decisive role.
Labor market polarization is also serious. The wage gap between regular and temporary workers, and between big companies and small companies is large, and as unstable jobs like platform labor increase, the ladder to move up to 'good jobs' has disappeared. The structural problem that makes it hard to become middle class no matter how hard you work is becoming fixed.
This class stratification goes beyond individual unhappiness to reduce society's vitality. When young generations feel they don't get rewarded despite their efforts, they lose motivation and give up on marriage and childbirth. Consumption shrinks and economic growth slows. Extreme inequality can increase social conflict and shake the foundation of democracy.
Therefore, the government and society must make restoring income mobility a top priority. A comprehensive approach is needed including strengthening redistribution through tax policy, guaranteeing a fair starting line in education and housing, and expanding good jobs through labor market reform. This is a long-term challenge that won't be solved in a short time, but it's homework that must be solved for future generations.
In the end, creating a society where there is hope that "if you work hard, you can have a better life" is the most important task of our time. Restoring the class ladder so everyone can have fair opportunities - that is the future of a sustainable Korea.
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