The Influence of Households’ Financial Debts on Income Inequality
Korean Social Policy Review. Won Seung-yeon (2015)
This paper, using the ‘Survey of Household Finances and Living Condition’, analyzed the households’ financial debts by income decile and the influence of financial debts on the income inequality. The empirical results are as follows. First, as households’ incomes are lower, their burden from the financial debts are larger. Second, calculating the level of income inequality by the Gini’s coefficient and Esteban-Ray Index, the inequality of the disposable income which is deducted by the interest and principal payment of financial debts became worse than that of current income. Third, as the households have higher financial debt ratios, their disposable incomes in next year decreased more. Above all, the lower-class households have the higher probability for their disposable incomes to decrease even if their current incomes increase. This shows that the increase of financial debts makes the lower-class households’ disposable incomes worse than higher and middle class households’ ones, which implies that the financial debts of households may aggravate the income inequality. The results suggest that the government should develop the fundamental income distribution policy, not dependent on the financial supporting policy which increase the households’ financial debts.
The duality of self-employment debt and its increase after the Exchange crisis
Economy and Society. Kim Do-kyun (2015)
By focusing on tis duality, this paper aims at explaining the increase of self-employment debt after the Exchange crisis in South Korea. While the amount of household debt has already gone beyond 100 billion won, the amount of self-employment debt is also estimated to reach 45 billion won. However, despite the seriousness of the problem, the self-employment debt issue has not drawn enough attention. While just regarding the self-employment debt as the sub-category of household debt, most of the existing researches only put an emphasis on the difference between them depending on the employment status. In contrast, this paper focuses on the fact that the self-employment debt retains the characteristic of both household debt and corporate debt at the same time and analyzes how the changes in financial market and labor market have affected the increase of self-employment debt after the Exchange crisis. The result is as follows. Like the household debt, the self-employment debt has also rapidly increased as a result of the expansion of consumer finance after the Exchange crisis. The result is as follows. Like the household debt, the self-employment debt has also rapidly increased as a result of the expansion of consumer finance after the Exchange crisis. But, in contrast that the increase of household debt is mostly related with the sousing issue, the increase of self-employment debt is closely linked with the unemployment problem. In other words, the government’s active support for the self-employment founding as a sort of the employment policy resulted in the intensification of business competition and subsequently in the increase of business expenses and self-employment debt. In result, this paper argues that while the support for self-employment had significant effects on overcoming the mass unemployment and delaying the economic crisis, it is now bringing about the new crisis of the increase in self-employment debt.
