The average household earned 4.87 million won ($4,100) per month in the July-September period, up 2.7 percent from the previous year, according to the data compiled by Statistics Korea.
The monthly average income of the bottom 20 percent income bracket came to 1.37 million won in the third quarter, up 4.3 percent from a year earlier.
In contrast, households in the upper 20 percent income range earned 9.8 million won during the cited quarter, up 0.7 percent from a year earlier.
The data also showed that monthly disposable income of those in the bottom 20 percent income bracket rose 4 percent, compared with a 1.2 percent hike for the upper 20 percent income group.
South Korea's distribution ratio for disposable income reached 5.37 percent in the third quarter, down from 5.52 percent for the same period last year.
A lower ratio means decreased polarization in income distribution.
Park Sang-young, director of short-term household income and expenditure statistics at Statistics Korea, said the income gap narrowed due to improved employment situations of the low-income bracket and slowing income growth of the upper 20 percent income group.
The data came as South Korea has been pushing for "income-led growth" under the Moon Jae-in administration, which envisions a virtuous economic cycle in which hikes in the minimum wages of low-income people could lead to increased spending that in turn could boost economic growth.
Moon's office stressed that the figures are indicative of a "clear accomplishment" emerging from the income-driven growth strategy.
The president described the narrowed income gap as a "very meaningful change," according to Cheong Wa Dae spokesperson, Ko Min-jung.
Moon was quoted as adding the government should continue constant policy efforts for "inclusive growth," going forward as well.
Those critical of Moon's economic policy have claimed that what they call his amateurish income-led growth program is behind growing difficulties, especially among small shop owners and small and medium-sized enterprises as it has increased the labor cost burden on them.
Finance Minister Hong Nam-ki wrote in a Facebook message that the latest income data is an encouraging development, noting the government's income-led growth policy and inclusive growth appears to be working.
South Korea raised its minimum wage to 7,530 won ($6) per hour in 2018, up 16.4 percent from 2017. The minimum wage was raised by 10.9 percent on-year to 8,350 won per hour in 2019.
But some critics claim the minimum wage hikes have increased the burdens on businesses, especially microbusiness owners and the self-employed.
The minimum wage for 2020 has been set at 8,590 won per hour, up 2.9 percent from 2019, the slowest growth in a decade amid an economic slowdown and sluggish job market. (Yonhap)