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Support system over the lifecycle : A cross-country comparison

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Frame of Image y. Public transfer systems are less significant in Korea compared with most OECD member countries. This is important because Korea has had the opportunity to develop sustainable systems less encumbered by obligations made to current and future generations. However, this is changing very rapidly. Relying on accumulated assets rather than transfers will help countries to create capital-intensive economies that can maintain standards of living. This is true for Korea, but the question of how the labor and capital market will respond remains as a critical question. Keywords: Social welfare, lifecycle, aging, elderly, fiscal sustainability JEL codes: H30, I31. J14, E21
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1. Introduction In most societies children and elderly consume much more than they produce through labor. The pattern of the lifecycle deficit varies a lot across countries because countries vary greatly in per capita economic lifecycles as well as population age structure. Hence the gaps between consumption and labor income, lifecycle deficit, should be filled by reallocations from working adults. Both public and private sectors mediate the resource reallocation. The public sector reallocates resources relying on social mandates and implemented by governments. Education, public pensions, and healthcare programs are important examples of public reallocations. Private sector reallocations are usually governed by voluntary contracts and behavior patterns that are mediated mostly by families. The reallocation system


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Title Support system over the lifecycle
Similar Titles
Sub Title

A cross-country comparison

Material Type Proceedings
Author(English)

Lee, Sang-Hyop

Publisher

[Seoul]:University of Hawaii(Department of Economics)

Date 2013
Event

2012 KDI Journal of Economic Policy Conference Shared Growth and Sustainable Development

Pages 54
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Social Development < Social Welfare

Abstract

I describe the complex support systems around the world, focusing on their importance for economic growth and fiscal sustainability. Familial transfers for old age support are somewhat significant in some Asian economies including Korea, although they deteriorate quite rapidly. Public transfer systems are less significant in Korea compared with most OECD member countries. This is important because Korea has had the opportunity to develop sustainable systems less encumbered by obligations made to current and future generations. However, this is changing very rapidly. Relying on accumulated assets rather than transfers will help countries to create capital-intensive economies that can maintain standards of living. This is true for Korea, but the question of how the labor and capital market will respond remains as a critical question.