Three Essays on Low Fertility, Population Aging, and Old Age Support Systems in South Korea
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2023
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This dissertation investigates the contemporary issues of low fertility, population aging, and the old age support system in South Korea. The first chapter focuses on the respective effects of two sources of population aging, fertility and mortality. The second chapter focuses on low fertility and evaluates the effect of the childbirth grant policy on boosting fertility considering maternal migration. The third chapter focuses on population aging and investigates elderly inequality and the old-age support system considering the role of familial transfers.
The first chapter examines how two factors of population aging, changes in fertility and mortality, will respectively affect South Korea’s economic future. The economic effects of population aging are examined by considering the population in each age group under alternative demographic scenarios. Utilizing South Korea’s recent population projections and National Transfer Accounts data, the paper applies a simple decomposition model to measure the respective effects of fertility and mortality on separate aspects of the economy: labor income, consumption, and public and private transfers. The results imply that the effects of low fertility and low mortality on the economy are very different in direction, magnitude, timing, and impact by age group. The only effect of an aging population that is the same in all circumstances is the effect on the public pension system. The results show that low fertility and low mortality will increase pressure on the public pension system of South Korea.
The second chapter investigates whether higher childbirth grants are really effective tools in boosting fertility, considering the maternal migration induced by regional differences in childbirth grants in South Korea. As interest in the effect of childbirth grants on fertility increases, there are also growing studies on the effect of childbirth grants on boosting fertility. However, the effect of childbirth grants on fertility in previous literature may be biased due to the maternal migration induced by regional differences in childbirth grants. In order to measure the true effect of childbirth grants on boosting fertility at the national level, maternal migration induced by regional differences in childbirth grants should be considered. By utilizing rich and unique data sets collected from all 17 provincial and 229 municipal units in South Korea, this study demonstrates that childbearing-aged females are incentivized to move into municipalities with much higher childbirth grants. The results also show that childbirth grants still have a positive effect on boosting fertility even after controlling for the effect of maternal migration induced by regional differences in childbirth grants. In addition, this study identifies that living and childbearing conditions are important decision factors for the migration of childbearing-aged females.
The last chapter examines the effect of familial support on reducing elderly inequality. Previous studies show that population aging may lead to an increase in inequality as inequality in income and consumption tends to increase with age. However, the effect of population aging on consumption inequality for the elderly may depend on the old-age support system, as transfers can reduce inequality. Although the role of public transfers was widely examined, little is known about the role of private transfers in reducing inequality. This chapter examines the role of familial transfers in the old-age support system and in reducing inequality using micro-level South Korea’s National Transfer Accounts (NTA) data. The results suggest that intergenerational private transfers in extended households do reduce consumption inequality for the elderly. By income level, the elderly in low-income households are more dependent on public transfers. The elderly in nuclear high-income households rely heavily on their own asset for consumption, whereas those in extended high-income households are more dependent on private transfers. The counterfactual analysis suggests that the consumption inequality for the elderly has increased over time not only because the population is aging but because the share of extended households is rapidly declining in South Korea.
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Economics, childbirth grants, elderly inequality, source of population aging
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155 pages
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