Harmonizing Social Welfare and Economic Growth: Case Studies of European Countries and Implications for Korea

Yoo-Duk Kang (), Cheol-Won Lee (), Tae Hyun Oh (), Hyun Jean Lee () and Junyup Kim ()
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Yoo-Duk Kang: Korea Institute for International Economic Policy
Cheol-Won Lee: Korea Institute for International Economic Policy
Tae Hyun Oh: Korea Institute for International Economic Policy
Hyun Jean Lee: Korea Institute for International Economic Policy
Junyup Kim: Independent

No 14-19, World Economy Brief from Korea Institute for International Economic Policy

Abstract: Welfare spending continues to garner a bigger chunk of the national budget in Korea. This has become a key economic issue attracting much public attention. Fiscal conservatives call for tighter controls on welfare spending, while some are calling for greater welfare spending in order to temper the effects of economic polarization. In this context, this paper analyzes relation between level of welfare spending and economic growth and proposes some conditions to create welfare system in favor of economic growth. Beyond quantitative analyses, the paper reviews reforms in welfare policy in Sweden, Denmark, Germany and Netherlands in order to understand how these countries have reacted to domestic and external challenges in their welfare system. Through economic analysis and case studies, the paper draws following policy implications for Korea. First, it is necessary to maximize existing welfare policy, but also develop ways to raise taxes in a growth-friendly manner. Second, it is highly recommended to create an atmosphere conducive to policy innovation. Third, it is necessary to establish growth-oriented welfare regimes with a special focus on strengthening human capital and employment rates.

Keywords: Social Welfare; Economic Growth; Social Expenditure; Welfare Reform; Europe (search for similar items in EconPapers)
Pages: 9 pages
Date: 2014-05-16
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Persistent link: https://EconPapers.repec.org/RePEc:ris:kiepwe:2014_019

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