S-Space College of Social Sciences (사회과학대학) Institute of Economics Research (경제연구소) Seoul Journal of Economics Seoul Journal of Economics vol.34 no.1~4 (2021)
Population Aging in Korea: Implications for Fiscal Sustainability
- Cho, Sungjin; Kim, Jan R.
- Issue Date
- Seoul Journal of Economics, Vol.34 No.2, pp. 237-264
- Adverse demographics in Korea impinges on its growth potential and fiscal outlook. Accordingly, this study examines the current demographic situation and recent projections related to the impacts of population aging in Korea, particularly on the looming fiscal imbalance. The focal conclusion is that a two-way effect exists from population aging. First is the anticipated stress placed on government finances due to increasing welfare expenditure for the elderly. Second is sluggish economic growth and thus the inability to collect sufficient government revenues. The prospect of large and growing deficits is therefore immediate and potentially long lasting as governments will be faced with rising spending demands and sluggish tax revenues arising simultaneously from an aging population.