A couple of thoughts on the decline of social mobility in Korea, which has been in the headlines and opinion pages lately. In case you had not heard, a survey by a government think tank showed that fewer Koreans are exiting poverty today compared to eight years ago. In 2005, 31.7% of low-income households rose to middle- or high-level, but in 2012, only 23.5% did so.

Troubling, to be sure. But it is interesting to note how little of this problem in Korea is about wages. Korea has one of the most equal wage structures in the world — before taxes. After taxes, it drops to 20th (just ahead of Canada), but back in the mid-00s, it fell to 17th, so a bit of a drop relative to other countries.

The big problem in Korea is not so much wages as it is the rising cost of housing and education, and the debts that come with them. Which is why it drives me nuts listening to newspapers, other pundits and the government talk about “re-starting the moribund real estate market.” The real estate market is already overpriced and harming Korean families; driving prices higher is insanity.

Education is crazy, too. Or, rather, schooling is. As I have written before, that is more about rent seeking and high barriers to entry in the labor market than it is about any real interest in education. Until Korea fixes how its companies and leading the government hires and promotes, nothing will change about its universities; and until people’s perspectives on going to university changes, nothing about its education system will change. Like the real estate market, this is basic economics — you have an inelastic, high-demand resource (the top 3 schools), so everyone is pursuing the same objective. And, as you learn on page 1 of your economics textbook, in a perfectly free market, profits drive to zero.

It’s worth noting, though, that while Koreans are very sensitive to inequality, they also remain very hopeful that things will be better for their children. That optimism is very important.

UPDATE: Oh, and keeping Korea’s well-educated women out of the workforce isn’t helping any.