Korea Development Institute

Transcription

1 Edited by Sang-Hyop Lee Andrew Mason Kwang-Eon Sul Korea Development Institute

2 List of Figures List of Tables List of Contributors Preface ix xii xvi xviii PART I. SOCIAL POLICY CHALLENGES 1. Introduction and Overview 1 Sang-Hyop Lee, Andrew Mason, and Kwang-Eon Sul Social Policy Challenges 2 Aging and Social Policy 3 Labor Market Issues 11 Poverty and Public Policy The Effects of Redistribution on Economic Growth: Empirical Evidence and Policy Implications 19 Youngsun Koh and Heesuk Yun Introduction 19, Inequality, Redistribution, and Growth: A Survey of the Literature 20 Influence of Equity on Growth 20 Influence of Redistribution on Growth 21 Influence of Growth on Equity 23 Growth and Redistribution: Industry-level Evidence 24 Hypotheses and the Estimation Model 24 Data 27 Regression Results 28 Trends in OECD Countries 33 Income Distribution in OECD Countries 33 Welfare Spending in OECD Countries 33 Implications for Korea 36 Welfare Spending in Korea 36 Childcare 39 Education 39 Labor Market Policies 39 National Pension Scheme 40 National Health Insurance 40 Housing 41 Credit Guarantees for Small and Medium-size Enterprises 42 Summary and Conclusions 42

3 iv PART II. AGING AND SOCIAL POLICY 3. European Welfare Reforms: The Social Investment Welfare State 47 Peter Taylor-Gooby Introduction 47 Western Welfare States: Current Challenges and the Emerging New Settlement 48 The Crisis of the Traditional Settlement 50 Different Contexts of Reform: Welfare State Regimes and Polities 52 National Differences and Welfare State Reform 55 The New Welfare Settlement 56 The Economic Case for a Social Investment Strategy 56 The Social Case for a Social Investment Strategy 59 Social Investment Strategies 61 The Knowledge Base: R&D Training 62 Activation: Mobilizing the Work-Force 63 Evaluation of the New Policy Directions 68 The Ends: Growth and Cohesion 68 Pathways to the New Settlement 70 Conclusions Social Policy in an Aging Society: Trends and Implications 81 Edward Palmer Introduction 82 Security in Old Age: The Mandated Minimum Pension Commitment 83 The Broader Public Pension Commitment in an Aging Society 86 Trends in Reform of Mandated Earnings-related Pension Schemes 92 What Is Notional Defined Contribution? 93 Financial Account Schemes Dominate the Reform Trend 96 Distributional Considerations 98 Why Are Defined Contribution Schemes the Main Trend in Reform? 99 The Aging Society and Family Policy 102 Summing Up 103

4 5. Population Aging and Sustainability of Korea's National Pension System 109 Hyungpyo Moon Introduction 109 Financial Evaluation of the Current National Pension System 110 Funding Policy of the NPS 110 Financial Projection of the NPS 113 Accounting Standard of the NPS 117 Actuarial Evaluation of the Pension Reform Plan 120 Major Features of the Reform Bill 122 Actuarial Evaluation of the Reform Bill 124 Policy Implications 126 Summary and Conclusions European Responses to the Aging Society 135 Tito Boeri Introduction 135 What Is at Stake Is Growth Rather than Competitiveness Per Se 136 Reforming European Public Pension Systems 140 Dealing with Political Obstacles to Reforms: Final Remarks Japanese Responses to the Ageing Society 147 Noriyuki Takayama Introduction 147 Demography and Its Impact on Financing Social Security 147 Japanese Pension Provisions before the 2004 Reform 148 Some Basic Facts about Pensions 150 A Persistent Deficit in the Income Statement 150 Huge Excess Liabilities in the Balance Sheet 150 The Heavy Burden of Pension Contributions 151 Overshooting the Income Transfer between Generations 152 An Increasing Drop-out Rate 152 The 2004 Pension Reform: Main Features and Remaining Difficulties 153 Increases in Contributions 154 Reductions in Benefits 154 Changes to Provisions for Working Seniors and Divorcees 156 Improved Survivors' Benefits and Child-raising Concessions 157 Other Public and Private Pension Reforms 157 Is the 2004 Reform Incentive-compatible? 158 A Declining Replacement Rate 159 Automatic Balance Mechanism: Still Incomplete 160

5 vi The Normal Pensionable Age 161 Increasing Transfers from General Revenue: Why? 161 Future Policy Options in Social Security Pensions 161 Social Security Health Care 163 Brief Outline of the Program 163 Financing Medical Costs of the Elderly Population 164 The 2002 Reform 165 The 2006 Reform 165 Future Options 166 Concluding Remarks Aging and Health Policy in Korea 171 Soonman Kwon Introduction 171 Health System and Policy in Korea 172 Aging, Health Insurance, and Health Care Reform 174 Aging and Health Expenditure 174 Health Care Reform in an Era of Aging Society 178 Aging and Long-term Care Reform for the Elderly 180 Type of Public Financing for Long-term Care 181 Relationships with Health Insurance 182 Coverage of Long-term Care Insurance 182 Implementation Strategy 184 Concluding Remarks Aging and Social Policy: An International Perspective 191 Andrew Mason, Sang-Hyop Lee, Ronald Lee, and Chong Bum An Introduction 191 National Transfer Accounts: An Overview 194 Data Sources 198 Preliminary Results 198 The Economic Lifecycle 199 The Reallocation System 202 Sources of Support, 206 Conclusions 207 PART III. LABOR MARKET ISSUES 10. Active Labor Market Policies: OECD Experiences and Lessons for Korea 211 Yong-seong Kim Introduction 211 Why Active Labor Market Policies? Theoretical Considerations 212

6 Lessons from the OECD Countries Active Labor Market Policies Evaluation of Active Labor Market Policies Active Labor Market Programs: What for Whom? Public Training Programs Job Search Assistance and Public Employment Services Youth Measures Subsidized Employment Direct Job Creation in the Public Sector Bottom Lines Active Labor Market Policies in Korea Overall Trends in the Korean Labor Market Policies Conclusions 11. An Analysis of Women's Fertility and Labor Supply Yoonyoung Cho Introduction The Relationship between Fertility and Women's Labor Supply Descriptive Analysis Exogenous versus Endogenous Fertility Analytical Framework A Model Changes over Time Policies Policies Frequently Used Policies in Other Countries Policy Suggestions for Korea Conclusions vii PART IV. POVERTY AND PUBLIC POLICY 12. Evaluating Public Housing Programs for Low Income Families in Korea 257 Joonhyuk Song Introduction 257 Public Housing Programs in Korea 258 Public Housing Programs in the United States and United Kingdom 262 A Model 265 Data 268 Empirical Specification 270

7 viii Empirical Results 271 Benefit Estimates 271 Benefit Distribution and Elasticities 273 Conclusions Pursuing Two Rabbits? Excellence and Equity in Education in South Korea 277 Taejong Kim Introduction 277 Two Rabbits Caught? Excellence and Equity in Korean Education 278 Standardization and "Equalization" in Korean Education Expansion 279 Demand for Private Tutoring and School Productivity: Equity? What Equity? 281 Concluding Remarks Public Assistance and Workfare 291 Colleen K. Chrisinger, Benjamin W. Cowan, John Karl Scholz, and Caleb Z. White Introduction 291 Background of U.S. Programs 292 Recent Policy Developments 294 What Have States Done? 296 Caseloads 298 The Viability of a Work-Based Antipoverty Strategy 298 Employment and Earnings in a Post-TANF World 300 Cracks in the Safety Net? 308 How Should the Safety Net in the United States Evolve? 310 Are There Lessons in This Analysis for Korea and Other Countries? 313