Abstract
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.