Social Policies in an Age of Austerity

Social Policies in an Age of Austerity

A Comparative Analysis of the US and Korea

KDI/EWC series on Economic Policy

Edited by John Karl Scholz, Hyungypo Moon and Sang-Hyup Lee

Social Policies in an Age of Austerity is the first major publication on the topic, with a particular interest in the United States and the Republic of Korea. The authors of the ten chapters in this book review recent developments in social policies in OECD countries, with a focus on achieving greater effectiveness in public spending on social programs, under increasingly tight national budgets. The contributions cover social and fiscal policy and issues in labor market policy, in addition to the effectiveness of social insurance, education and antipoverty policy.

Chapter 6: Expanding coverage of the National Pension in Korea: the effectiveness of the matching contribution subsidy

Hyungpyo Moon

Subjects: asian studies, asian economics, asian social policy, economics and finance, asian economics, social policy and sociology, comparative social policy, economics of social policy


Hyungpyo Moon examines the compliance behavior in the National Pension system in Korea and evaluates the effectiveness of the matching contribution subsidy in expanding coverage. The author begins with a brief history of the system and its pitfalls. In 1988 the Korean government introduced the National Pension Scheme, but with limited coverage. According to data from the National Pension Corporation for the year 2009, a total of 18.6 million people were insured under the system. Slightly more than half were insured through their place of work and the others were insured as individuals. However, well over half of the individually insured were given exemptions or deferrals from making contributions. In Korea, workers are entitled by law to be insured through their place of work. But employers in smaller companies often are either unable or unwilling to pay the employer’s contribution to the scheme, leaving the workers uninsured. Such workers may join the scheme as individuals, but many of them choose to remain excluded from the system, either because they do not want to pay the premium or because of the burden it would place on an already low level of income.

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