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This paper identifies two distinct types of inequality affecting the advance of the Korean literacy in opposite ways. Literacy improvement in colonial Korea was checked by the presence of landed elite with pre-colonial origin, but helped by the development of profit-seeking land tenancy associated with contractual formalization. Abolishing both the aristocratic and market-oriented landlordism, the post-colonial land redistribution accelerated the advance of literacy by destroying the structural inequality, rather than by reducing the market inequality. It is thus important for policymakers to identify the nature of inequality they face before embarking on redistribution.