Social Spending in Korea: Can it Foster Sustainable and Inclusive Growth?

October 19, 2012

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Selim A Elekdag. Social Spending in Korea: Can it Foster Sustainable and Inclusive Growth?, (USA: International Monetary Fund, 2012) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Going forward, Korea faces two closely related challenges: sustaining economic growth against the backdrop of a rapidly aging population and ameliorating income inequality. This paper argues that a gradual increase in social spending could promote more sustainable and inclusive growth in Korea. In particular, simulation results suggest that social spending which supports labor market reforms can boost longer-term growth. However, despite rapid increases recently—albeit from a low base—there is still a social spending gap relative to Korea’s OECD peers. Because of several fiscal challenges in the coming decades, increases in social spending should be incremental, and would be usefully guided by a longer-term fiscal framework.

Subject: Aging, Inclusive growth, Income distribution, Income inequality, Labor, Labor markets, National accounts, Personal income, Population and demographics

Keywords: Aging, Fiscal policy, Global, Growth, Income, Income distribution, Income inequality, Korea, Labor market, Labor market reform, Labor markets, OECD area, Personal income, Service sector, Social, Social spending, Spending, Spending gap, Welfare program, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/250
Stock No:

WPIEA2012250
ISBN:

9781475549218
ISSN:

1018-5941

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