This study examines the evolution and drivers of income and wealth inequality in Korea. Using standard distributional measures, such as the Gini coefficient, income shares, and quintile ratios, alongside a novel functional time series analysis of Lorenz curves, the study reveals diverging trends between income and wealth. Income inequality has modestly declined, driven by rising income shares among the bottom 75%. In contrast, wealth inequality has steadily worsened, driven by expanding asset shares of the top 25%. This widening wealth gap stems largely from real estate assets, and the disparity between households owning property in the Seoul metropolitan area and those without is more consequential than homeownership status alone, reflecting a strong metropolitan premium. Empirical analysis further shows that when the price-to-income ratio (PIR) is high, housing demand shocks trigger amplified and persistent rises in both housing prices and household debt―a dynamic that entrenches asset-based stratification and risks slowing intergenerational mobility. To address these challenges, the study argues for rebalancing property taxation by raising property holding tax while reducing the burden of transaction and capital gains taxes. It also calls for region-specific approaches that reflect local housing market conditions and for balanced national development to mitigate excessive metropolitan concentration, ensuring that economic outcomes are more closely tied to productive activity rather than asset ownership.

Abstract
Preface
Summary (Korean)

Chapter 1. Introduction

Chapter 2. Income and Wealth Inequality in Korea
　Section 1. Measuring Inequality
　Section 2. Trends in Income and Wealth Inequality in Korea
　Section 3. Changes in the Lorenz Curves for Income and Wealth

Chapter 3. Causes of Changes in Income and Wealth Inequality
　Section 1. Causes of Changes in Income Inequality
　Section 2. Causes of Changes in Wealth Inequality

Chapter 4. Mechanisms Driving Greater Inequality
　Section 1. Growth Rates of Income and Wealth
　Section 2. Mechanism: PIR and Housing Prices

Chapter 5. Conclusion

References

Appendix