[Diagnosis and Prescription] South Korea’s Low Birth Rate: Problems, Causes, and Solutions

Table of Contents

I. Raising the Issue

II. The Reality of Low Birthrates and the Problems They Cause

1. The Severity of Low Birthrates

2. Problems Caused by Low Birthrates

III. Causes of Low Birthrates

1. Unmarried Women and Married Women

IV. Solutions to the Low Birthrate Problem

1. Differences Between the Unmarried and the Married

(1) Unmarried

(2) Married

2. Systemic Solutions

(1) The Money Supply and the Rapid Decline in Purchasing Power

(2) Unemployment, Low Growth, and Corporate Tax Cuts

(3) Regulation of the Education Market

(4) Building Childcare Infrastructure

V. Problems with the Government’s Low Birthrate Measures

VI. Conclusion

References

I. Raising the Issue

As of 2018, the total fertility rate stood at 0.98. In 2005, the total fertility rate had fallen to as low as 1.08, but afterward it rebounded to 1.30 in 2012. However, after 2012, the total fertility rate fluctuated and fell to 1.05 in 2017. The 2017 total fertility rate was lower than that of 2005. Then in 2018, the total fertility rate fell below 1.

A total fertility rate below 1 is the first such figure in the world for South Korea. It was probably also the first such low figure in Korean history. A total fertility rate below 1.3 is classified as ultra-low fertility, and South Korea became an ultra-low fertility society in 2001. A figure of 0.98 is extremely low even compared with Taiwan’s 1.2, Japan’s 1.4, and Canada’s 1.5.

To prepare for low birthrates and an aging society, the government enacted the Framework Act on Low Birth Rate in an Aging Society in 2005 and established the Presidential Committee on Ageing Society and Population Policy under the president. The government then formulated its Basic Plan for Low Birth Rate and Aging Society and began allocating a budget. That budget started at approximately 2.1 trillion won in 2006 and increased every year to 20.5 trillion won in 2016. It then rose sharply to 27.5728 trillion won in 2017 and 30.6002 trillion won in 2018. The low-birthrate budget per newborn was about 4.65 million won in 2006 and about 66.69 million won in 2018. Over the past 10 years, the low-birthrate budget per newborn increased more than fourteenfold, yet the total fertility rate actually fell from 1.08 in 2005 to 0.98 in 2018. Between 2006 and 2018, the total fertility rate rose to 1.30 in 2012, but afterward fell to 0.98 in 2018. Between 2006 and 2018, although there were periods of temporary decline, the total fertility rate showed an upward trend until 2012 (about a 20% increase compared with 2005) and thereafter the downward trend continued.

This gives rise to two questions. The first is why the total fertility rate has continued to decline. The second is why the government’s measures against low birthrates have not had a significant effect. More specifically, why did the total fertility rate rise temporarily after 2006, peak in 2012, and then decline so that by 2017–2018 it had fallen below the 2005 level (the year before government spending to address low birthrates began)? Of course, the first question is the more important one, and the second may yield clues in the process of answering the first.

Since childbirth is possible only when marriage takes place, the low birthrate issue cannot help but focus on the issue of non-marriage as well. Non-marriage can be divided into “voluntary” and “involuntary” non-marriage. There is an unofficial survey in Korean society claiming that 80–90% of non-married people are involuntarily non-married. This means that most of them want to marry but have been unable to do so because various conditions are not favorable. It also means that, unlike in the West, there are not all that many people who voluntarily choose not to marry. Reasons for becoming involuntarily non-married include missing the appropriate age for marriage, failing to find a suitable spouse, lacking time, having an older brother or older sister who is still unmarried, or finding marriage expenses burdensome. Economic factors are not the only causes that force people into involuntary non-marriage, but they certainly appear to be an important one. Along with non-marriage, late marriage also affects childbirth, so any analysis of the low birthrate problem must address late marriage as well.

* For the full text, please refer to the attached PDF file.

Wiki:

https://www.cfe.org/w/bbsDetail.php?&idx=30

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Original title: [진단과 처방]저출산의 한국경제: 문제, 원인 그리고 해법

Author: Yong-deok Jeon

Date: 2019-04-19

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=report&pn=3&idx=20105