An Investigation of Factors Contributing to the Increasing Wealth Gap in South Korea Via Linear Regression: Causes and Policy Suggestions

James Joonsik Cho

Village Christian High School

Abstract

The wealth gap has been a consistent issue in capitalistic societies, especially in the United States and South Korea. Inequality not only hurts the economy in general but also causes social and health problems in society. Hence, it is worthwhile to look into the causes of the wealth gap to have it reduced in society. In South Korea, experts believe that several factors contribute to the rising wealth gap. Some examples include rising housing prices, education fees, and more non-regular employees compared to full-time employees. This study explores the factors that specifically impact the income gap by using data mining, which is a process of finding major patterns in big data sets. The study involves the use of linear regression – a process involving data utilization to determine the correlation between variables and make predictions based on that relationship. This study utilized regression analysis to organize data as given by economic indicators and compare it to wealth gap indicators, including the gini coefficient and income quintile share ratio. Based on the findings from regression analysis, this study concludes that multiple economic factors, including rising numbers of non-regular employees, housing prices, and education fees, each contributed to the rising income quintile share ratio in South Korea. When these factors were analyzed together, they also showed a strong correlation with the rising Gini coefficient of South Korea. In other words, it is safe to assume that those factors had contributed to the rising income inequality. For future works, it will be meaningful to look into specific local data to analyze the wealth gap by area.

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