The proverb "a dragon rises from a stream" is drifting further from reality. The Bank of Korea (BOK) on the 11th released research findings showing that income and asset gaps between the Seoul metropolitan area and non-metropolitan regions are widening. In particular, "the inheritance of poverty" is intensifying among young people outside the metropolitan area.
Analyzing the Korea Labor and Income Panel Study (KLIPS) with the Organization for Economic Cooperation and Development (OECD), the Bank of Korea (BOK) estimated the "rank-rank slope (RRS)" for intergenerational transmission of economic status at 0.25. An income RRS of 0.25 means that if parents move up 10 ranks in the income distribution, their children's income ranks rise by an average of 2.5 ranks.
Income percentile is a value that converts income rank within the same age group to a 100-point scale, with higher numbers indicating higher-income groups. Based on this, the RRS estimates how closely parents' and children's incomes move together.
The inheritance of assets was even more pronounced. The asset RRS was estimated at 0.38. If parents' asset rank rises by 10 steps, their children's asset rank rises by an average of 3.8 steps. This means intergenerational gaps persist more strongly in assets than in income.
However, when children leave their parents' residence and move to other regions, income improves as education environments and job conditions change. The average income percentile of children who migrated was 6.5 percentage points higher than their parents, while that of non-migrant children was 2.6 percentage points lower.
But this "ladder of social mobility" was also concentrated in the metropolitan area. For children born in the metropolitan area who moved within it following universities and jobs, the income RRS was 0.06. That is significantly lower than for the group that stayed in the same area (0.38). In contrast, among those born outside the metropolitan area, the gap between migrants (0.17) and non-migrants (0.30)—the migration effect—was smaller than in the metropolitan area.
Outside the metropolitan area, the intergenerational transmission of poverty was notable. Among those born between 1971 and 1985 outside the metropolitan area whose parents were in the bottom 50% of income, the share who remained in the bottom 50% in the children's generation was in the high 50% range. But among those born between 1986 and 1990, that share exceeded 80%. The share who jumped from the bottom 50% to the top 25% plunged from 13% to 4% over the same period.
The Bank of Korea (BOK) emphasized that to ease the residence-linked structure of intergenerational transmission of economic power, efforts are needed to transform the provinces "from a small stream into a great river." Proposed alternatives included introducing a "regional proportional selection system" to expand opportunities for low-income students outside the metropolitan area to enter top universities in Seoul, selective and concentrated public investment in flagship universities outside the metropolitan area, and strengthening industry and job bases centered on hub cities.