| The topic of income distribution has been widely discussed in development economics in recent years. The focus has been on the relation between income distribution and economic development, particularly factors affecting income distribution.;The main objective of this paper is to reexamine the inequality-development relationship focusing on the two questions raised by Kuznets, with special reference to the Korean economy: "What is the systematic long term relationship?" and "What factors determine trends of income inequalities?";First, the review of literature on the relation suggests that although the Kuznets hypothesis is partly supported by cross-section analysis, the U-shaped trend is not clearly supported by time-series analysis. The Kuznets hypothesis appears to be a rule of thumb from the experiences of some developed countries, and cannot be generalized as a robust economic theory.;Second, the paper analyzes the factors that are widely believed to explain the changes in income distribution in Korea. Multiple regression analysis is applied to test and assess the effects of major development strategies and structural factors on income distribution.;Many development economists believe the "Kuznets hypothesis"--that inequality in developing countries follows an inverted U-shaped curve, first increasing and then decreasing with economic growth. By contrast, much research suggests that the relationship might vary from country to country, and that economic development itself does not significantly influence a country's inequality.;Major contributing factors to a more equal distribution appear to be productivity and real wages, government expenditure on social welfare programs and education, the ratio of direct tax to indirect tax, and non-farm income.;Major contributing factors to a less equal distribution appear to be inflation rates, wage gaps, incentives for savings, the share of property income, and concentration of farm land ownership.;An interesting result is the effect of the grain price supporting policy. Regression results show that the policy's negative effect is stronger than its positive effects on income distribution of farm households as well as overall households. |
