![Theories
of
AXtude
towards
RedistribuCon
• Consider
current
uClity
– Meltzer-‐Richard
hypothesis
(1981)
• Consider
future
uClity
– Tocqueville’s
observaCon
[1835]
– Tunnel
effect
(Hirschman
1973;
same
context
for
equal
opportunity
in
Alesina
and
La
Ferrara
2005,
Alesina
and
Angeletos
2005)
– The
POUM
hypothesis
(Bénadou
and
Ok
2001;
Bossi
and
Gamus
2013)](https://image.slidesharecdn.com/2014pmrc-210302194802/85/2014-PMRC-6-320.jpg)
2014 PMRC
- 1. Explaining the Surge of Demand for Social Services in South Korea: Tes;ng the Prospect of Upward Mobility Hypothesis Soomi Lee University of La Verne California, USA Prepared for PMRC June 30, 2014 Seoul, Korea
- 2. MoCvaCon • A recent substanCal growth of the demand for redistribuCon and social services in South Korea. • Subsequent development of welfare poliCcs – A debate, sparked in 2011, over the free lunch for all elementary school students in Seoul. – The 2012 presidenCal elecCon, described as “a game of welfare one-‐upmanship” (The Economist 2013).
- 3. • What explains this substanCal growth of the demand for redistribuCon and the subsequent emerging welfare poliCcs in Korea? • Upon observing the recent trends of increasing income inequality and declining social mobility, I test the prospect of upward mobility hypothesis in the context of South Korea.
- 4. No class effect in Korea Current literature on welfare aXtudes in Korea • “Inconsistency between self-‐interest (class) and preference for redistribuCon” – No social class division in welfare poliCcs. – Social welfare and sociology literature (Kim 1999; Lee 2002; Joo and Baek 2008; Kim and Yeo 2011; Woo and Nam 2014)
- 5. Why? • Underdeveloped welfare system (Woo and Nam 2014) à an o^and and ad-‐hoc interpretaCon • Need to go beyond class and consider variaCons in personal resources and welfare status (An 2009). • Problem: a lack of theoreCcal grounds
- 6. Theories of AXtude towards RedistribuCon • Consider current uClity – Meltzer-‐Richard hypothesis (1981) • Consider future uClity – Tocqueville’s observaCon [1835] – Tunnel effect (Hirschman 1973; same context for equal opportunity in Alesina and La Ferrara 2005, Alesina and Angeletos 2005) – The POUM hypothesis (Bénadou and Ok 2001; Bossi and Gamus 2013)
- 7. Recent Trends in Income DistribuCon in South Korea
- 8. 1997 Financial crisis 0.27 0.26 0.32 (2009) 0.31 0.28 .22 .24 .26 .28 .3 .32 .34 1990 1995 2000 2005 2010 2015 Before tax After tax Income Inequality in Korea: Gini Coefficient,1990-2013
- 9. 3.3 4.67 5.02 (2009) 2.2 2.53 1997 2 3 4 5 1990 1995 2000 2005 2010 2015 P90/P10 Income Ratio P80/P20 Income Ratio Household Monthly Income Before Taxes and Trasfers: 1990-2013 Income inequality: p90/p10 ratio and p80/p20 ratio
- 10. 52% 62% 28% 115% 67% 50% 1990-‐2013 1990-‐1997 1998-‐2013 Bonom 10% Top 10% Before Financial Crisis Aoer Financial Crisis Income Growth of the Top and the Bonom 10% (Monthly household income adjusted to family size)
- 11. 47.2 40.2 35.3 34.4 72.6 69.7 65 63.7 53.4 51.2 46.5 45.4 1996 2000 2006 2010 The Middle Class: 1996-‐2010 Size of the middle class (all income sources) Size of the middle class (labor income only) Income share of the middle class (labor income only)
- 12. 62 67 93 90 1995 2000 2003 2009 “Income DistribuCon is Unequal.” (% Respondents)
- 13. 28.4 46.7 24.7 29.1 57.9 13.9 Likely Unlikely Don't Know 2006 2013 Prospect of Own Social Mobility: 2006-‐2013 (Head of Household)
- 14. Empirical Evidence in Other Countries • USA (Alesina and La Ferrara 2005; Alesina and Angeletos 2005; Margalit 2013) • Russia (Ravallion and Lokshin 2000) • Hungary (Tóth 2003; Molnár and Kapitány 2006) • Germany (Rainer and Siedler 2008) • Japan (Ohtake and Tomioka 2004) • Western European countries (Cusack, Iversen and Rehm 2006; Guillaud 2013 ) • LaCn American countries (Gaviria, Graham, and Braido 2007)
- 15. Empirical Test • Data: 2009 Korean General Social Survey – Cross-‐secConal survey data with n=1,535. • Dependent variable – Role of government in reducing income inequality between the rich and the poor on a three-‐point scale • Empirical model – Ordered probit regression – Exp(e)=0 and Var(e)=1.
- 16. Independent Variables • Intra-‐generaConal mobility – Prospect of personal finance of R’s household in ten years – Past experience of personal income mobility – Equal opportunity of the society • Inter-‐generaConal mobility (Pikeny 1995) – EducaConal mobility (objecCve) – Income mobility (subjecCve) – OccupaConal mobility (subjecCve)
- 17. Control Variables • Household income (in natural log, equalized) • SubjecCve income group • PercepCons of the income gap between the rich and the poor • PoliCcal ideology (conservaCve to liberal) • Employment status (temporary, unemployed, reCred, not in labor market; regular workers = reference group) • Demographic factors: educaConal anainment, age, gender, and marital status
- 18. DescripCve StaCsCcs 1.97 8.32 14.94 46.26 28.51 0 10 20 30 40 50 % 0 Strongly Disagree Disagree Neither Agree Strongly Agree Support for Redistribution
- 19. 12.48 28.96 39.33 16.68 2.56 0 10 20 30 40 50 % Far below Below Average Above Far above A. Subjective income 1.8 8.47 31.87 45.87 12 0 10 20 30 40 50 % Much Worse Worse Same Better Much Better B. Income prospect in 10 years 9.03 22.89 44.15 21.91 2.03 0 10 20 30 40 50 % Much Worse Worse Same Better Much Better C. Income change in the past 1.2 1.2 2.2 10.5 9.8 12.9 15.414.6 11.311.7 4.2 3.2 1.8 0 5 10 15 20 % 2.5 1 Unequal Equal 1.5 D. Equal opportunity index Distribution of Independent Variables
- 20. Effects of SubjecCve and ObjecCve Income on AXtude towards RedistribuCon (1) (2) Income (log) -‐.007 .027 (.053) (.058) SubjecCve income -‐.070 (.047) Control variables Yes Yes N 1405 1397 Log likelihood -‐1007.029 -‐1002.243 Note: Dependent variable is support for the role of government in reducing income gap between the rich and the poor. Robust standard errors in parentheses; *p<0.10; **p<0.05; ***p<0.01.
- 21. Effect of Upward Social Mobility on Demand for RedistribuCon (1) (2) (3) (4) Income (log) .036 .027 .013 .021 (.059) (.058) (.059) (.059) SubjecCve income -‐.060 -‐.046 -‐.052 -‐.045 (.048) (.051) (.047) (.048) Income prospect -‐.096** -‐.083* (.047) (.047) Past income changes -‐.060 (.043) Equal opportunity .329*** .323*** (.077) (.078) Control variables Yes Yes Yes Yes N 1377 1394 1391 1371 Log likelihood -‐985 -‐999 -‐988 -‐972 Note: Robust standard errors in parentheses; *p<0.10; **p<0.05; ***p<0.01.
- 22. SubstanCve Effects: Pr(Agree|X) (1) (2) Marginal Effect Min to Max Prospect of income -‐.03 -‐.12 Changes of income in the past -‐.02 -‐.08 Equal opportunity .1 .24
- 23. Effect of Income Prospect on Pr(Agree|X) 0.6 0.7 0.8 0.9 Much worse Worse Same Bener Much Bener Far below average Below average Average Above average Far above average
- 24. Effect of Equal Opportunity on Pr(Agree|X) 0.5 0.6 0.7 0.8 0.9 Equal Unequal Far below average Below average Average Above average Far above average
- 25. Effect of POUM on aXtude towards redistribuCon II Effects of intergeneraConal mobility (1) (2) (3) Socioeconomic mobility 0.025 (0.020) EducaConal mobility -‐0.030 (0.038) OccupaConal mobility -‐0.014 (0.035) Control Yes Yes Yes N 1396 1301 1258 Log likelihood -‐999.498 -‐920.671 -‐887.760 Note: Dependent variable is support for the role of government in reducing income gap between the rich and the poor. Robust standard errors in parentheses; *p<0.10; **p<0.05; ***p<0.01.
- 26. Conclusion • Findings support the POUM hypothesis in Korea. – The demand for redistribuCon depends on the prospect of personal income and general percepCon of equal opportunity. – Experience of intra-‐ and inter-‐generaConal mobility has no impact. – Current uClity (both objecCve and subjecCve) has no impact. • The recent trends of income inequality, income polarizaCon, and diminishing upward social mobility seem worrisome.
- 27. ImplicaCons • PoliCcal responses to the increased demand for redistribuCon may encourage campaign pledges without accountability and sound fiscal management plans. • Developing welfare state should be simultaneously implemented with developing other means to encourage upward social mobility.
- 28. LimitaCons and Future DirecCon • Cross-‐secConal analysis does not take into account idiosyncraCc heterogeneity across individuals. • A longitudinal study must be considered.
- 29. Thank you.