(see Poster Gallery) A Cost-Benefit Analysis of Land Reform Policy of South Korea in the 1950s

Inequality of assets brings inequality of real income, which in turn, causes inequality of assets. In order to break this vicious cycle, developed countries currently redistribute their income through various social welfare systems. To solve this problem, South Korea, which was the poorest country in the world with the lowest Gross National Income (GNI), had implemented land distribution in the 1950s, after the fall of the Japanese Empire. To be specific, the U.S. military government in South Korea sold all the properties including 13.4% of the total farmlands that the former Japanese Empire had left behind at substantially below the market price. The South Korean government also distributed 16% of total farmlands at a reduced price, which they purchased from the original owners.

This study systematically reviews the contribution of the land reform policy

with an interdisciplinary approach that encompasses economics, history, and social work. Specifically, this study estimates the contribution of the land reform policy to society in total, using cost-benefit analysis. The contribution of the land reform policy is calculated by dividing it into two: the monetary and non-monetary values. The monetary value section includes savings, compensation, administration costs, asset, and agricultural productivity. The non-monetary section includes equality, the actual abolition of feudalism, past liquidation, social cohesion, educational opportunity, and national security.

Preliminary findings of this study are as follows: Regarding the monetary value, the present value of the yield increase from the increase in agrarian productivity for 20 years was 3.06 tons of rice at a 5% discount rate. After deducting administration costs, estimated to be 0.82 tons of rice, the present value of the net yield increase was 2.24 tons of rice (equivalent to KRW 43,112). From the sales for the land reform, landlords lost 11.54 tons (equivalent to KRW 56,251) while recipients gained 10.05 tons (equivalent to KRW 50.912) per hectare. Combining those results, I can conclude that there was an increase of over 0.75 tons (=2.24 tons of rice-11.54 tons+10.05 tons, equivalent to KRW 37,773) per hectare through the land reform for the society in total. Regarding the non-monetary value, the positive effects of this land distribution on equity, the actual abolition of feudalism, and past liquidation (punishment for pro-Japanese sympathizers), resulting in social cohesion, educational opportunity, national security, and further, agricultural productivity, are found.

Land distribution in the 1950s in South Korea can be considered to have led to rapid economic growth by alleviating inequality of assets, and further, inequality of real income. In that sense, we can say that it acted as the greatest social welfare policy that provided people with a minimal economic baseline. This land distribution policy was a drastic measure; however, there are some points that governments in the world can adopt for alleviating poverty and inequality. Specifically, it will be beneficial to consider similar policy concepts for distributing properties in the North Korean area after Korean unification and for developing asset-building policies for developing countries.