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Income versus Consumption Inequality in K orea: Evaluating Stochastic Dominance Rankings by Various Household Attributes
Author(s) -
Heshmati Almas,
Rudolf Robert
Publication year - 2014
Publication title -
asian economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.345
H-Index - 28
eISSN - 1467-8381
pISSN - 1351-3958
DOI - 10.1111/asej.12043
Subject(s) - stochastic dominance , economics , inequality , dominance (genetics) , poverty , consumption (sociology) , household income , demographic economics , marital status , econometrics , economic inequality , labour economics , demography , mathematics , geography , economic growth , biology , sociology , mathematical analysis , social science , biochemistry , population , archaeology , gene
Using four rounds (1999, 2002, 2005 and 2008) of the K orean Labor and Income Panel Study, the present paper examines determinants of household income and consumption levels and inequalities. Unconditional as well as conditional stochastic dominance tests are performed by year, by household heads’ characteristics (age, education, gender, health, marital status and occupation) and by household characteristics (household type, household size and degree of urbanization). Mean least squares regression techniques are used to predict conditional expectations. The residuals containing effects for each characteristic conditional on the remaining characteristics are then used for the stochastic dominance analysis employing extended K olmogorov– S mirnov tests of first‐order and second‐order dominance in distribution of income and consumption. The results provide a detailed and up‐to‐date picture of inequality and poverty by subgroup in K orea, which helps in targeting particularly vulnerable groups. While inequality in disposable income is found to be substantial, consumption inequality is less substantial. Households headed by the elderly, the uneducated, the divorced, the widowed, females, and those with health problems are found to be the most vulnerable groups.