On The Consumption Expenditure Distortion among Different Income Classes: Evidence from South Korea and Japan

The aim of this paper is to depict the social problemscommon to South Korea and Japan by comparing theirconsumption behaviors. For that purpose, we utilize theSurvey of Household Economy of both countries and attemptto determine the similarities and differences betweenthe two countries. Our empirical analysis revealed thefollowing. First, although both countries are aging, the firstquartile (the poorest in under the definition in this paper)in South Korea has aged more rapidly than in to Japan. As the wages in these two countries formerly increasedwith age, this substantial divergence in the age compositionin the poorest quartile is a remarkable change and suggeststhat income inequality has been more widely spreading outin South Korea than in Japan. Furthermore, the educationexpenditure ratio in South Korea is statistically significantfor higher income level, while this is not the case in Japan. If the opportunity for better education is dominated bywealthier households, the prompt implementation of a policyto break this vicious circle is necessary in South Korea.