Copyright: Son, Hyun Hwa
Copyright: Son, Hyun Hwa
Korea and Thailand are regarded as tiger economies for their success in achieving impressive economic growth during the last three decades Along with their illustrious growth performances, both economies have experienced significant changes in inequality and poverty over the last decade of the twentieth century The issues associated with economic growth and shifts in inequality and poverty are multi-dimensional and complex This thesis deals with these three phenomena examining both the methodological and empirical aspects Korea and Thailand are the subjects of my empirical analysis The study uses unit-record micro data that include the Family Income and Expenditure Survey and the Survey of the Economically Active Population for Korea, and the Socioeconomic Survey and the Labour Force Survey for Thailand, with all surveys covering the period from 1990 to 1999. These data sources, obtained from the National Statistical Offices in the two countries, are used extensively throughout the study. The study focuses on the following issues: (a) the relationship between growth, inequality and poverty, (b) the role of education in explaining individual earnings, (c) economic crisis, (d) empirical analysis of inequality and poverty, (e) decomposition of measures of inequality and poverty through savings, and (f) assessing government fiscal policies from the perspective of equity Economic growth is closely interrelated and intertwined with inequality and poverty This study analyses these three phenomena in view of the economic development that has taken place in Korea and Thailand during the last three decades of the twentieth century The accumulation of human capital through learning-by-doing and education plays a pivotal role in determining a nation's economic growth. Using a regression model, this study looks into the effect of education on earnings in the labour market The study confirms the hypothesis that those who have a higher education credential have greater returns than those with a lower education credential. Moreover, the study finds that an individual who completed a degree earns more than one who did not complete his or her degree The study develops the earnings-education model controlling for factors such as years of work experience, hours of work, residential region and area, migration status, gender and formal or informal sector. Another essential element to promote economic growth is a well functioning labour market Through introducing the long-term trend index, this study shows that when Korea and Thailand both experienced rapid economic growth in the early and mid 1990s, open unemployment rates were very low and employment and the labour force participation rates were rising. The study also develops the crisis index that captures the adverse effect of the 1997 economic crisis on the Korean and Thai labour market in terms of employment, unemployment, and the labour force participation rate The study finds that while the Korean economy has been affected more severely by the crisis than the Thai economy has been, the crisis has more adversely affected the vulnerable groups m society, such as the elderly and women. Finding the factors that contribute to inequality is a difficult task and has not been dealt with well in the relevant literature This study attempts to explain inequality in terms of many socioeconomic and demographic characteristics using the idea of relative deprivation. The regression model developed to explain the relative deprivation suffered by individuals is utilised to project inequality in the future. Another important finding of the thesis is that the difference in income-based and consumption-based inequality or poverty estimates can be explained by different savings behaviour across households, which has seldom attracted attention in the existing literature According to my empirical analysis, in Thailand inequality of income is higher than inequality of consumption, whereas in Korea consumption is more unequally distributed than income. This is explained through the difference in the concentration of savings between the two economies Similarly, the difference in the pattern of poverty between Korea and Thailand is analysed in terms of the differences in average savings rates and the relative distributions of consumption and income among households The study also develops a methodology to assess government fiscal policies from an equity point of view. Through this method, a government can assess whether its public expenditures benefit the poor or the rich in society Likewise, this methodology also helps to review whether a government's tax policies are pro-poor or pro-rich This idea of assessing a government's public policy is applied to both Korea and Thailand The empirical study demonstrates that there is considerable scope to make present fiscal policies in Korea and Thailand more equitable In particular, the Thai system is found to be regressive and benefits the rich proportionally more than the poor The Korean system is found to be less regressive than the Thai system.