彼得森经济研究所-大流行的长期影响：韩国的财政和生育前景（英）-2021.6-24页_643kb

21-16 The Pandemic's Long Reach: South Korea's Fiscal and Fertility Outlook

Core Content

South Korea managed the early stages of the COVID-19 pandemic effectively due to strong societal discipline and proactive government measures, such as mass testing and digital tracing. As a result, it avoided full economic lockdowns and implemented a relatively modest fiscal stimulus compared to other G20 and OECD countries. The country’s low public debt and small government model remained largely intact despite the pandemic, and it has not experienced significant excess mortality.

Main Points

• Fiscal Response: South Korea's fiscal stimulus in the first five quarters of the pandemic was only 4.5% of GDP, significantly below most advanced economies. Its financial liquidity support was around 10% of GDP, which is still modest by global standards.
• Economic Stability: The pandemic has not substantially altered South Korea’s fiscal position. Its general government revenue share remains low at 22.9% of GDP, and net debt is projected to rise to 26.8% of GDP by 2022, still far below that of most advanced economies.
• Demographic Transition: South Korea is undergoing a rapid demographic shift, with a shrinking working-age population and an aging society. The total dependency ratio is expected to rise from 36.2% in 2015 to over 53% by 2030 and over 100% by 2055.
• Fertility Crisis: South Korea has the lowest total fertility rate (TFR) among advanced economies, at 0.84 in 2020. This is well below the TFR in Japan (1.35) and the U.S. (1.64). A fertility rebound to 1.27 by 2040 is assumed in government forecasts, but this is a rare and significant shift in fertility levels for a high-income country.
• Postponed to Forgone Fertility: Fertility in South Korea has shifted from being postponed to forgone, as older women no longer compensate for declining fertility among younger cohorts. This trend is unlikely to reverse without substantial policy changes.
• Marriage and Fertility: The marriage rate in South Korea has declined sharply, with more divorces than marriages in 2020. This trend is particularly concerning for fertility, as marriage is a key factor in childbearing. The country also has one of the lowest rates of out-of-wedlock births globally, which further limits fertility rebound.
• Gender Inequality: South Korean women bear 85% of unpaid household work and family care, which discourages marriage and childbearing. This gender imbalance is exacerbated by the high educational attainment of women, which makes it difficult for them to find partners who are equally educated, leading to persistent marriage mismatches.
• Education Costs: The high private cost of education in South Korea, relative to disposable income, is a significant barrier to having multiple children. However, this cost is not unique to South Korea compared to other OECD countries.
• Migration Trends: Net inward migration has been a key factor in slowing population decline, but future political tensions with China may threaten its sustainability.

Key Information

• TFR Trends: South Korea’s TFR dropped to 0.84 in 2020, the lowest among advanced economies. It has experienced a 32% decline since 2010.
• Demographic Projections: The working-age population peaked in 2018 and is projected to fall below 20 million by the early 2060s. The total population is expected to peak at around 52 million in the late 2020s and decline to 40 million by the mid-2060s.
• Effective Retirement Age: South Korea has the highest effective retirement age in the OECD at 72.3 years, leading to an average of over 11 years in retirement, compared to 20 years in France.
• Pension Replacement Rate: The net replacement rate for pensions in South Korea is just over 40%, one of the lowest in the OECD.
• Fertility Rebound: The assumed rebound in fertility to 1.27 by 2040 is extremely rare for high-income countries and would require major societal and policy changes.
• Social Norms: Strong conservative norms and limited access to childcare discourage childbearing outside of marriage, making it difficult for South Korea to achieve a fertility rebound.

Conclusion and Policy Implications

South Korea faces significant challenges in reversing its fertility decline. The country’s demographic outlook is shaped by a combination of low fertility, declining marriage rates, and persistent gender inequality in unpaid labor. While net inward migration has provided some relief, it is unlikely to be sustainable in the long term. The government’s role in increasing fertility is expected to be limited, and the country must address deep-rooted social and economic factors to reverse the trend.