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Human Resources and Social Development in Korea (Essays on the Korean Economy Vol.Ⅳ)

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커버이미지
  • 저자 박종기, 편(朴宗淇, 編) , 김선웅, 편(金善雄, 編) , Peter J. Donaldson, 연하청, 편(延河淸, 編) , 주학중, 편(朱鶴中, 編) , 김영봉(金榮奉) , 서상목, 편(徐相穆, 編)
  • 발행일 1980/10/01
  • 시리즈 번호 41
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요약 Human Resources and Social Development in Korea

During its ten-year existence, the Korea Development
Institute has published a large number of policy-oriented
research papers in English. These papers address a wide range
of socio-economic problems and issues. While the demand for
these works has risen steadily as greater attention is focused on
Korea's development experience, many are out or print. To meet
this need we select some of these papers and publish them
together in a single volume at various intervals. Macroeconomic
and Industrial Development in Korea. The previous two volumes,
Planning Model and Macroeconomic Policy Issues and Industrial
and Social Development Issues, were published in 1977.

The seven papers brought together in this volume document
the studies undertaken since 1977 by economists and other social
scientists affiliated with the Korea Development Institute, either
as full-time research staff members or as visiting fellows.
Because these papers have been written ar different times in the
past, some may be less relevant to Korea's current situation.
However, since all of works analyze aspects of the Korean
economy and society at various points in the development
process, they will help readers to understand the nature of
Korean experience and the issues facing the Korean economy.
We hope that the studies contained in this volume will also be
useful in assessing prospects and establishing strategies for
other developing countries.(※ 서문에서 발췌한 내용임)

Economic Growth and Income Distribution

Throughout the rapid economic growth and development
since the early 1970s, the Korean economy has demonstrated
relative equity in income distribution. Based on the estimated
size distribution of income and the computed distributive
measures for the selected bench mark years of 1965, 1970, and
1976, income distribution seems to have improved slightly from
1965 to 1970, and thereafter deteriorated. Nevertheless, the
distribution of income in Korea over time for the period under
consideration has still been relatively equitable by international
standards and in view of the present stage of development.

The distribution of income in the agricultural sector was
found to have less intrasectoral inequality than the
non-agricultural sector throughout the entire period. However the
relative importance of agriculture is declining sharply as a result
of rapid industrialization. In particular, a notable worsening of
intrasectoral inequality seems to have taken place since 1970,
although intersectoral unequality has been diminishing with the
improvement of rural income levels. the most notable
improvement in the sectoral size distribution of income was
registered among non-farm households from 1965 to 1970,
primarily due ti the rapid absorption of urban unemployment and
underemployment.

By decomposing this sector into employer and employee
households, we can see that the two groups have significantly
diverged since 1970. while the changes in the size distribution of
income for the employees are more or less in conformity with
those for the overall size distribution of income, the intrasectoral
distribution among employer households seems to have
deteriorated more than any other group.

From the decomposition of the Theil indices for the bench
mark years, it can be noted that the measured inequality is
primarily explained by the differences within sectors rather than
between them. For each bench mark year, intrasectoral inequality
accounted for about 90 percent of the total measured. During the
period studied, the importance of the agricultural sector with its
relatively equitable distribution of income has been declining due
to rapid structural changes in the economy. St the same time
the significance of employer households with their relatively high
level of distributional inequality has been growing. The pattern
of income inequality among employee households has remained
rather stable, although the relative importance of this sector has
risen.

The relative equity in income distribution in Korea is
Attributable to many factors : historical, economic, and social.
Korea's history of colonial rule, wars, and suffering ironically
has provided a favorable basis for an equitable distribution of
income. Prior to the years of rapid growth, both human and
capital resources were rather evenly distributed. Furthermore the
strength of the new regimes enabled them to undertake drastic
measures such as land reform and the confiscation of illegally
accumulated wealth, actions which had a positive impact on
distributive equity. In addition, the employment creation through
labor-intensive export-led growth and the initiation of policy
measures aimed at eradicating the urban-rural income gap were
the main forces accounting for the surprising harmony between
growth and equity thus far in Korea.

A number of distributive policies and measures have been
initiated or intensified since the early 1970s. For the poor, a
public works program for employment creation has been
established, public assistance for subsistence and medical care
has been granted, and income tax exemptions have been
provided. For the employed, a special measure to encourage
asset formation has been introduced, and, to a limited degree, an
effort has been made to transform taxi drivers into
owner-operators. In order to promote rural development, the
Saemaul Undong was established.

In addition price supports were provided to farm products,
agricultural inputs were subsidized, and income tax exemptions
granted to farm households. It is difficult to tell the extent to
which these measures have influenced the distribution of income
in Korea. Unfortunately, the lack of data regarding the many
historical and economic factors whose interplay has determined
the flow of income, as yet still precludes an exhaustive
investigation of the matter.

After more than a decade and a half of rapid economic
growth, the relative equity in income distribution that existed in
the past seems to be breaking down. Specifically, there are a
number of emerging policy issues which have adversely affected
the intrasectoral distribution. The development process
necessarily requires the formation of human and reproducible
capital. Truely, the past performance of the Korean economy if
impressive in this aspect. Yet one of the most critical issues has
been the distribution of this capital. The belief that better
students are from poorer families is no longer true. Nor is the
waying that family can not be rich for more than three
generations. Rapid growth has created new beliefs : that one can
be rich for many generations by virtue of birth, and that higher
educational opportunities are becoming closed to the children of
the lower income classes. by no means are these phenomena
unique by international standards, but they do represent a
significant departure from the historical development of Korea.

In connection with reproducible capital formation and its
distribution under conditions of rapid inflation and asset
appreciation, the distribution and incidence of the grant element
implicit in foreign borrowing and bank loans must be examined
from the point of distributive equity. This grant element arises
from the interest differentials between nominal and actual rated
which exist under the current dualistic structure of the money
market. Excessive borrowing by big firms and export industries
would result in a redistribution of assets, since great differences
exist between the present value of the loans and the discounted
future value to be repaid. Consequently, the conditions under
which borrowing takes place should more closely reflect the
shadow prices of capital.

Rapid industrialization has necessarily been accompanied by
structural changes which have shifted the focus of the economy
toward the heavy and chemical industries. Since the late 1960s,
these changes have proven the merits of economies of scale for
business groups and conglomerates. The expansion of firms into
groups and conglomerates has had at least two distributive
implications. First, it has broadened the organizational hierarchy
resulting in wider wage and salary differentials. Second, it has
bid up, at least in short-run, wages for skilled and technical
manpower, despite the abundant supply of semi-skilled and
unskilled labor, again widening wage and salary differentials.

This tendency of widening differentials has been evident
since 1975, as has been noted earlier. Should full employment be
attained within the foreseeable future, then these increasing
differentials would contribute to the general increase of wages
and salaries after a time lag. However, the high annual rate of
labor force growth , which is projected to exceed 3 percent per
annum until 1992, is likely to restrain the incomes of unskilled
workers and the low income classes. Consequently, without the
introduction of appropriate policy measures, intrasectoral
inequality among employees may be expected to further
deteriorate.

Rapid changes in the industrial structure adds another aspect
to the distribution question. Thus far, the equitable income
distribution in the agricultural sector has been a most important
reason for the relative equity in Korea. However, the importance
of this sector is diminishing, and the difficulty of improving
farm incomes through price supports, subsidies, and increased
agricultural productivity, is more and more apparent. As has
already been indicated, the accumulated deficits from the grain
and fertilizer management special accounts already pose threats
to domestic stability.

New and innovative policy measures for this sector need to
be designed in order to prevent the worsening of intersectoral
and intrasectoral inequality. One possible approach would be to
increase the share of rural nonfarm income. This prescription
may be simple, but to translate it into policy requires
comprehensive regional development. At the same time, industrial
urban growth must be sustained in order to absorb the labor
force from agricultural sector, as well as to provide employment
opportunities to an expanding labor force. Although a number of
measures have been taken ti aid the absolute poor and lower in
come classes, the priority of these measures has inevitably been
low in the past, since planners have been preoccupied with
investment and defense requirements.

Nevertheless, in the past, employment generation through
rapid labor-intensive industrialization helped to alleviate the
problems of the lower income classes. No single measure for the
elimination of extreme poverty is better than providing
employment. However social changes have created new pockets
of the potentially poor. For example, the number of elderly has
been growing with the prolongation of life expectancy and
changes in the age structure of the population. The number of
physically handicapped has also increased due to industrial and
traffic accidents.

Incases when these accidents result in death, young widows
encounter particular difficulty since they stand little chance of
remarriage due to traditional social values. These are the
groups most in need of special attention from the redistributive
standpoint. The failure to make necessary adjustments for these
groups would further aggravate intrasectoral inequalities, the
reduction of which is the primary goal for distributive and
redistributive policies.

The Patterns of Poverty

This work has estimated the poverty line, counted the poor,
and examined characteristics of the poor households. Despite the
various shortcomings of the statistics used in the analysis,
several conclusions can be drawn from the issues examined
herein.

The poverty line must be determined in relation to the
prevailing price level at a given time and place, and established
as a function of household size and composition. This work has
estimated poverty lines for urban and rural areas, over time and
for different family sizes. There is no doubt that further effort
should be made to update the commodity composition for
estimating the minimum living expenditures and to establish
finer breakdowns in the poverty line among regions and
households with different sizes and compositions.

The incidence of poverty and other indices of poverty
declined significantly during the period 1965-76, although the
first half of the decade showed a higher rate of decline than the
second half, This has a number of implications. First, the
high-growth strategy, through the creation of many employment
opportunities is a very effective way of reducing poverty in a
developing economy such as Korea in the early 1960s. Second,
the effectiveness of the high-growth strategy tends to diminish
as the hard-core poor, who do not benefit directly from
economic growth, constitute a relatively larger proportion of the
poor.

Thus, the high-growth strategy needs to be supplemented
by policy measures designed directly for improving the welfare
of the poor. Third, due to the rapid economic growth and the
declined in the incidence of absolute poverty, the poverty gap
has become a relatively smaller portion of the GNP and
Government expenditures. This implies that income
re-distribution schemes for the benefit of the poor are gradually
becoming more feasible.

In recent Years the incidence of relative poverty has shown
an increase due to the deterioration in overall income
distribution, while the incidence of absolute poverty has declined.
If this trend continues, it is likely that relative poverty will soon
be a more urgent social issue than absolute poverty in Korea.

The regional composition of the poor has changed drastically
: in 1966 the rural poor comprised a majority ( 64 percent),
while in 1976 the urban poor was a majority ( 59 percent). This
is a reflection of the fact that manufacturing has been the
leading sector in the economy during this period, and that
rural-urban migration has been very high. In urban areas the
incidence of absolute poverty seems to have increased slightly
during the 1970s. This may have adverse social and political
implications unless appropriate policy measures are taken to
combat this situation.

The average standard of living of the poor in Korea may be
better than those in other developing countries, but this is far
from satisfactory. In terms of health and housing conditions, the
poor in Korea seem to have serious difficulties. Furthermore, the
educational level among the poor is considerably lower than the
national average. In order to reduce the absolutely poor, as well
as to prevent poverty from being transferred to the nest
generation, it is important to make educational opportunities
readily available to all income groups.

Despite the recent decline in the incidence of absolute
poverty, the working poor constitute a majority among the poor.
This implies that antipoverty programs in Korea should consist
of not only welfare programs, but also methods designed to
improve the productivity and wages of the working poor. Finally,
it should be emphasized that in order to formulated appropriate
and detailed anti-poverty measures more should be known about
the patterns of poverty in Korea. Thus, serious efforts should be
made to collect reliable statistics on income distribution and
poverty on a regular, consistent basis.
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