Limited Income Mobility: Empirical Evidence from Korea

Using the Korea Labor and Income Panel Study from 1998 to 2010, we measure income mobility and determinants of income ranks and mobility. Empirical outcomes reveal that income mobility is quite limited for both the poorest and the richest income households. Moreover, a macro economic shock had heterogeneous impacts on each income group and the low-income class was highly vulnerable to it. Given the long-lasting impacts of early stage factors and initial endowment on income, this paper calls for policies to support citizens suffering from illness, family breakdown, poor initial conditions, and aging.