Analyzing the Relationship between Cost of Living and Nominal Wages and Real Income Inequality in Korea

Abstract

This study analyzes the relationship between the cost of living and nominal wages in Korea and investigates whether there are compensating wages depending on different living costs. Taking into account of the relationship between the cost of living and nominal wages, we compare the real income inequality with nominal income inequality at three different stages, namely, cross-sectional, short-term, and long-term. The cross-sectional income inequality analysis is limited to a specific period of time

the short-term income inequality analysis focuses on the time period of one generation

finally, the long-term income inequality analysis extends the time period to more than one generation.