Moving from rural areas to Seoul and other parts of the capital region can lead to higher incomes, but the effect on social mobility has weakened, particularly among younger generations, according to an analysis by the Organization for Economic Cooperation and Development (OECD). The likelihood of relocating to the capital region is increasingly influenced by parents' economic conditions.
On July 27, the Korea Research Institute for Vocational Education and Training released an issue brief highlighting findings from Chapter 4 of the 'OECD Economic Report on Korea 2026.' The OECD noted that economic opportunities, quality jobs, education, and various services are concentrated in the capital region, exacerbating regional disparities.
The OECD and the Bank of Korea analyzed data from over 1,000 individuals born between 1971 and 1990 and their parents, using the Korean Labor Panel Survey from 1998 to 2023. They classified cases where individuals' birthplace differed from their current residence as regional migration and examined the income relationship between parents and children based on whether they were born in or moved to the capital region.
The analysis revealed that those who relocated generally exhibited higher intergenerational income mobility compared to those who did not migrate. Specifically, moving from non-capital areas to the capital region resulted in a significant increase in individuals' absolute income levels.
However, this benefit was not uniform across all demographics. For individuals born outside the capital region, the advantages of moving to the capital were heavily dependent on their parents' income. Children from relatively low-income families were found to have a lower likelihood of relocating to the capital.
Generational differences were also evident. The impact of regional migration on income mobility was more pronounced in earlier generations, while it has diminished for those born between 1981 and 1990. The OECD concluded that the correlation between parents' and children's incomes has strengthened among younger generations, making it increasingly difficult to offset this through regional migration alone.
High housing costs in the capital region were identified as a significant barrier. According to the OECD, apartment prices in the capital region have nearly doubled from 2013 to 2026, significantly outpacing wage growth. As of 2024, the national housing supply rate was 102.5 units per 100 households, but in Seoul, it was only 94 units. More than half of Seoul's apartments are over 20 years old.
In 2025, only about 7% of homes in Seoul were affordable for median-income households using standard mortgage loans without additional asset support, a sharp decline from 32% in 2012. The OECD considers homes affordable if the required mortgage repayment does not exceed 25% of household income.
In Gyeonggi and Incheon, the proportion of affordable housing for median-income households was also less than half. The OECD explained that even when including jeonse (a type of lease), the close correlation between jeonse deposits and housing prices means the core conclusions of the analysis remain unchanged.
The concentration of population in the capital region is also exacerbating the decline and aging of populations in non-capital areas. As young people migrate to the capital in search of education and jobs, non-capital regions face labor shortages, reduced tax revenues, and diminished local services, further encouraging youth outmigration.
The OECD believes that policies aimed solely at reducing housing and migration costs are insufficient. To alleviate the concentration in the capital region and intergenerational inequality, improvements in job quality, access to education, vocational training, and digital infrastructure in regional areas are essential.
* This article has been translated by AI.
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