In Korea, a wealth gap exists between married people

A wedding photo [PIXABAY]

More married couples in Korea consist of both high-income and low-income partners, which ultimately led to less income inequality between households, a recent study from the Bank of Korea (BOK) showed.

A study called “The Effects of Earnings Homogamy and Household Structure on Household Income Inequality” done by economist Park Yong-min of the Economic Research Institute at the BOK showed that earnings homogamy in Korea was significantly weaker than in 34 member countries of the OECD. Earnings homogamy refers to a marriage between spouses with similar income.

According to the study, Korea’s Gini coefficient of personal earned income reached 0.547, which was higher than the average for major countries of 0.510. But a Gini coefficient based on household earned incomes was only 0.361, lower than the average of 0.407.

In other words, the Gini index for households is much lower than for individuals in Korea. A Gini coefficient of zero means there is an equal distribution of income, whereas a number closer to one indicates greater inequality.

The BOK indexed the scale of marriages with similar-income partners and concluded that the higher the index, the more equal the partners are. Such an earnings homogamy index for Korea stood at 1.16 as of 2019, the lowest among 34 analyzed countries, for which the average was 1.6. European countries including Hungary, France and Luxembourg had the highest index.

The percentage of people in the richest top 10 percent to tie the knot was 2.2 times higher than the percentage of men and women with different incomes marrying randomly. That was three times higher than in major analyzed countries. The marriage rate between men and women with the lowest incomes was 1.2 times in Korea, compared to 1.9 times seen in other countries.

In addition, the proportion of single-person households and single-parent households in Korea was 14.7 percent and 4.0 percent, respectively, which is lower than the average for major countries at 22.6 percent and 7.4 percent each.

“The reason behind why the incomes are pooled and fairly shared within the households in Korea is because earnings homogamy is less seen in Korea than in other countries,” Park said. “In other words, marriages in Korea are closer to where people marry ‘randomly’ regardless of the income levels.”

Korea’s low earnings homogamy and other characteristics of its household structures are seen to have contributed to reducing the household income inequality by 10 percent, the BOK study said.

Assuming that people with similar income levels meet and marry, as in Northern European nations such as Sweden and Denmark, the household income inequality in Korea is forecast to rise by 15 percent. But the effect of wealth redistribution policies, such as government tax support, is expected to do little to alleviate inequality compared to major countries.

But such conclusions need more research.

“There are studies showing that in the United States, earnings homogamy has strengthened after women's participation in the economy rose since the 1970s,” Park said. “In Korea, if the benefits of gender division of labor reduce due to a sharp drop in the fertility rate, the employment rate of women with high-income husbands could rise, further deepening household income inequality.”

BY KIM KYUNG-HEE, SEO JI-EUN [seo.jieun1@joongang.co.kr]