copy the linklink copied!2. Families, family life and family policy in flux

Korean families are changing fast. Fertility is low and falling rapidly. Koreans are marrying and starting families later than ever before. Couple-with-children households, the dominant household type in Korea until only recently, will soon make up fewer than one-quarter of all households. The Korean population, still one of the OECD’s youngest, will soon be among its oldest.

This chapter provides an outline of the many ways in which families are changing in Korea. It covers developments in demographics and family structure, shifts in attitudes towards marriage, parenthood, family, gender roles, and changes in Korean public support for the family, with particular emphasis on changing financial supports.

    

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

copy the linklink copied!2.1. Introduction and main findings

Korean families are changing. Only a few decades ago, family life in Korea meant a traditional couple-with-children household, with two married parents and, often, at least two children. Links across generations were incredibly strong. Marriage and parenthood were seen by many as duties and obligations, while responsibility for the care of vulnerable family members (both young and old) was placed almost entirely on the family itself. Inside the home, couples often operated a male breadwinner-style gender division of labour. Male partners often worked long, full-time hours, while female partners engaged much more in unpaid work in the home, especially after the arrival of children.

Things look very different today. Korean attitudes towards marriage, family and gender roles have loosened in recent decades, moving away from the strict system of mutual responsibilities and obligations. Young Koreans in particular are putting less weight on marriage and parenthood than in previous years, with more and more people seeing both as a choice rather than an obligation. The responsibility for elder care is no longer seen as the family’s alone. Koreans also increasingly oppose a strict gender division of labour and the “male breadwinner” family model, even if men continue to work very long hours and attitudes towards women’s careers – and in particular, the importance of women’s careers relative to men’s – remain more traditional than in many other OECD countries.

Family behaviours have changed considerably too. Koreans are increasingly postponing family formation, preferring to marry and start a family later than ever before. Since the early 1990s, the average age of Korean women at first marriage has increased by five years, as has the average age at first birth. Fewer Koreans are getting married now than in the past, and more are getting divorced. Fertility rates are low and falling rapidly. In 2018, the Korean total fertility rate – the average number of children born per woman over a lifetime, given current fertility rates – is likely to have fallen for the first time below the symbolic level of one child per woman. This would be the lowest total fertility rate in the OECD by some margin.

These changes will have a profound effect on the future shape of Korean society. Korea’s low and declining birth rates mean that over the next few decades, Korea will shift from being one the of OECD’s youngest countries to one of its oldest. The median age of a Korean is set to increase by ten years in the next twenty years. The old-age dependency ratio – the number of people aged 65 and over per 100 working-age adults aged 20-64 – will more than double over the same period. Fewer children means fewer traditional couple-with-children households; in their place, single-person households are set to become the most frequent household type. Fewer children also means fewer future workers. Between now and 2040, the total size of the Korean labour force is set to decline by about 2.5 million workers, with major implications for economic performance and the sustainability of public finances.

Korean public policy is responding to these challenges. Over the last decade or so, Korea has transformed its system of public family support, with public spending on families having grown more than tenfold since the early 2000s. Public childcare support is now generous and comprehensive (Chapter 4), and paid leave is theoretically extensive, even if there remains issues around coverage and payment rates (Chapter 3). In recent years, attention has turned towards financial supports for families. In 2018, for the first time, Korea introduced a universal child allowance for young children. The expansion in 2019 of two refundable means-tested tax credits (the earned-income tax credit and child care tax credit) will also help provide more families with more financial support.

However, there is room for Korea to do more in supporting families with children, especially with respect to financial support. Families with older children in particular still receive relatively little financial assistance from the government, partly because the new child allowance covers only young children. One option for Korea is to extend the child allowance to cover all children until they reach adulthood, or at least until they leave compulsory education at age 14. However, since the child allowance is not means tested, this would involve transfers to families of all types, including those already on relatively high incomes. A second option is to increase payments made through one or both of the means-tested earned-income and child care tax credits. This would provide greater targeted assistance to those families that need it most – low-income families. From the perspective of supporting families with children, expanding the child care tax credit is likely to be most preferable, since payments made through this credit respond directly to the number of children in the family.

copy the linklink copied!2.2. Changing families

Families are changing in many ways in the OECD. Most OECD countries have seen fertility rates decline over the past two or three decades, and with it, the average size of families as well (OECD Family Database). Increasingly, both men and women want to establish a foothold in the labour market first before starting a family, leading to increases across the OECD in the ages at which couples are getting married and the ages at which mothers are having their first child. More and more adults remain childless (OECD Family Database).

At the same time, families are becoming more diverse. Increases in the frequency of divorce and growth in the number of births outside marriage mean that many more children are growing up outside of the traditional married-couple household. In 2017, on average across OECD countries with available data, roughly 15% of children aged 0-17 lived with two unmarried, co-habiting parents, and 17% lived with a single parent (OECD Family Database). Parents are also more often re-partnering, giving rise to growth in the number of step and blended families.

The way families operate in the labour market is changing, too. Across the OECD, there has been a sharp increase in the proportion of women attaining high levels of educational attainment and in the proportion of women entering the labour force (OECD Employment Database; OECD Family Database). In most OECD countries, women now have a better chance of fulfilling their career aspirations. The role of the male breadwinner model is diminishing and in most OECD countries, dual-earner families prevail in one form or another (OECD Family Database).

In many respects, Korea is no different. As elsewhere in the OECD, Korean families have changed considerably over recent decades. Couples in Korea are increasingly postponing family formation, for example. The average age of women at marriage in Korea has increased by about five years since the early 1990s, as has the average age of women at childbirth (OECD Family Database). When Korean families do have children, they often have far fewer children than in the past; the share of live births that are third or higher births has fallen from about one-in-four in 1981 to less than one-in-ten in 2017 (Statistics Korea, 2019[1]). Divorce rates in Korea, although slightly lower now than in the early 2000s, are still more than twice as high as they were at any point before 1990 (OECD Family Database).

Yet, in several other ways, Korea stands out from much of the rest of the OECD. Sometimes this is just a matter of the pace of change. For example, many OECD countries have seen birth rates fall in recent decades, but Korea’s decline has been faster and more pronounced than almost anywhere else (Section 2.2.1). In other cases, Korea exhibits trends that differ considerably from most other OECD countries. The clearest example here is in the continued importance of marriage as a social institution. Elsewhere in the OECD, many couples now live together and raise children before or without getting married, whereas in Korea, births to unmarried couples remain extremely rare (Section 2.2.2). As a result, Korea’s rapidly declining marriage rate has important implications for fertility.

2.2.1. Low and declining fertility

Fertility in Korea has declined dramatically over the past few decades (Figure 2.1). Historically, similar to many East Asian countries, fertility in Korea was very high. Throughout the 1960s and 1970s, Korea had some of the highest total fertility rates (TFRs) in the OECD (OECD Family Database) and Korea’s TFR of 4.5 children per woman in 1970 was still well over 50% higher than the OECD average (2.7 children per woman) (Figure 2.1). However, over the course of only few decades, fertility in Korea has plummeted to the lowest level in the OECD. In the mid-1980s, Korea’s TFR fell to below two children per woman, and by the mid-2000s, it had fallen to a historic low of 1.1 (Figure 2.1). In 2017, Korea’s TFR stood at just 1.05. Preliminary figures for 2018 suggest it is now likely to have fallen below the symbolic figure of one child per woman (Statistics Korea, 2019[1]).

The underlying dynamics of Korea’s fertility decline are complex (Chapter 5). Much of the early decline (up to the mid-1980s) can be explained by a reduction in the number of families having several children, especially three or more children, while later declines (from the early-1990s) were driven more by young Koreans postponing parenthood (see below). More recently, Korean families have also increasingly turned away from having a second child, and childlessness is on the rise too (Chapter 5).

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Figure 2.1. Fertility in Korea has plummeted over the past half century and is now lower than in any other OECD country
Figure 2.1. Fertility in Korea has plummeted over the past half century and is now lower than in any other OECD country

Note: The total fertility rate is defined as the average number of children born per woman over a lifetime given current age-specific fertility rates and assuming no female mortality during reproductive years. 2018 data for Korea are provisional.

Source: OECD Family Database, http://www.oecd.org/els/family/database.htm, and Statistics Korea, http://kosis.kr/eng/

2.2.2. Declining marriage, increasing divorce, and few births to unmarried parents

As in most other OECD countries, Koreans are increasingly postponing marriage. The average age at first marriage for a man in Korea has risen by 5 years over the past two and a half decades, from 27.8 years in 1990 to 33.2 in 2018. The average age of women at first marriage has increased by very slightly more, from 24.8 years in 1990 to 30.4 years in 2018 (Statistics Korea, 2019[1]).

Together with shifts in the age distribution of the Korean population, the postponement of marriage is driving a sharp decline in the frequency of marriage (Figure 2.2). Korea’s crude marriage rate – the number of marriages per 1000 people in the country – has more than halved since the early 1980s, falling from 10.6 marriages per 1000 in 1980 to 5.0 marriages per 1000 in 2018 (Figure 2.2). This is higher than the latest available OECD average (4.7 marriages per 1000), but only just (Figure 2.2). On current trends, Korea’s crude marriage rate will likely fall below the OECD average in the next few years.

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Figure 2.2. Korea's marriage rate has halved since 1980 and is now only slightly higher than the OECD average
Crude marriage rate, Korea and OECD average, 1970 to 2018
Figure 2.2. Korea's marriage rate has halved since 1980 and is now only slightly higher than the OECD average

Note: The crude marriage rate is defined as the number of marriages per 1000 people. The OECD-27 average excludes Australia, Canada, Chile, France, Iceland, Israel, Mexico, Turkey and the United States. 2018 data for Korea are provisional.

Source: OECD Family Database, http://www.oecd.org/els/family/database.htm, and Statistics Korea, http://kosis.kr/eng/

At the same time, divorce is also more frequent now in Korea than in the past. In 1980, Korea’s crude divorce rate stood at just 0.6 divorces per 1000 people – together with Portugal, the joint lowest divorce rate among OECD countries with available data (OECD Family Database). However, sharp increases through the 1990s and early 2000s saw the rate rise to a historic high of 3.4 divorces per 1000 in 2003. It has fallen back slightly since, but in 2018 still stood at 2.1 (OECD Family Database; Statistics Korea (2019[1]). This is lower than in several other OECD countries including Denmark, Finland and the United States, but higher than the latest OECD average (1.9 divorces per 1000).

These trends are common across the OECD, but in many respects, they matter more in Korea. While in other OECD countries, declining marriage and increasing divorce rates have been accompanied by a sustained rise in births to unmarried parents, this is not the case in Korea. Strong and persistent social norms (see Section 2.3) mean that births outside of marriage remain extremely rare (Figure 2.3). Indeed, in 2016, just 1.9% of births in Korea concerned births to unmarried parents. This is less than one-twentieth of the OECD average rate (40.3%), and has hardly changed over the past four decades (OECD Family Database). Only Japan and Turkey have comparable births-outside-marriage rates, with almost all other OECD countries now seeing at least one-in-four births arriving to unmarried parents (Figure 2.3).

The low number of births outside marriage is central to Korea’s fertility decline (Chapter 5). In Korea, much more than in other OECD countries, delaying marriage also means delaying parenthood. In line with the rising age of women at first marriage, the average age of Korean mothers at first birth has risen by more than five years since the mid-1990s, from 26.5 years in 1995 to 31.9 years in 2018. This is more than half a year higher than any other OECD country (OECD Family Database). The average age of Korean mothers at all births now stands at almost 33 years of age. Notably, birth rates among married women in Korea have actually remained relatively stable in recent decades (Chapter 5). However, because many Koreans are marrying later or not at all, this pool of married couples is shrinking rapidly. Potential factors explaining the decline in marriage are discussed in Box 2.1, and other drivers of Korea’s low fertility are explored in depth in Chapter 5.

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Figure 2.3. Births to unmarried couples remain extremely uncommon in Korea
Share of births outside of marriage, OECD countries, 2016
Figure 2.3. Births to unmarried couples remain extremely uncommon in Korea

Note: Births outside of marriage are defined as births where the mother's marital status at the time of birth is other than married. Data for Australia, Japan, Korea and New Zealand refer to ex-nuptial/out-of-wedlock births, that is, where the child's parents are not registered as married to each other (or, for New Zealand only, in a civil union with each other) at the time of the birth. For detailed notes, see the OECD Family Database (http://www.oecd.org/els/family/database.htm).

Source: OECD Family Database, http://www.oecd.org/els/family/database.htm.

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Box 2.1. Social and economic factors driving the decline in marriage in Korea

In Korea, as in much of East Asia, marriage historically involved much more than just the formalisation of a relationship between two people. The term “marriage package” has been used to signify that, especially for women, marriage in Korea carried numerous intra-familial responsibilities and obligations that extended beyond what many in the West would consider as the immediate family unit. Once married, women were expected to prioritise children and family responsibilities. In many cases, they were perceived as chiefly responsible for children’s educational success and, where necessary, elderly care for parents from both sides of the family (Bumpass, 2009[2]).

Despite the strength of marriage as a social institution, more and more young Koreans are postponing marriage (see above), or even forgoing it altogether. Part of the reason may be a change in attitudes – Western family values, which place much less emphasis on marriage as an obligation, have increasingly influenced young Koreans. However, it is likely that several social and economic factors are also playing a role, too:

  • First, with increases educational attainment (Section 2.2.4), Korean women now have access to many more opportunities in the labour market. This has substantially increased the opportunity cost of marriage for many, making marriage less attractive than it once was. Moreover, where there is a preference for a partner with similar or high levels of education, Korean women’s exceptionally high levels of education mean it is numerically difficult for many to find suitable partner.

  • Second, many young people in Korea are struggling to establish themselves in the labour market and in the housing market (OECD, 2019[3]). A comparatively high share of young Koreans are not in employment, education or training (NEET; Chapter 1), and those who work all too often find themselves in precarious jobs, with low pay and little job and income security. This is a particular problem for family formation when it effects the male partner in a couple. In Korea, men are often still expected to arrange housing for the couple. Those with wealthy parents or well-paid jobs may consider buying, but most rely on renting, specifically “jeonse”.

  • Third, while cohabitation before marriage is now common in many Western countries, in Korea, it remains rare. Attitudes are slowly changing, however (Ahn and Im, 2004[4]). In 2018, around 56% of Koreans (and more than 70% of people in their 20s and 30s) stated that it is acceptable for unmarried partners to live together, up more than 13 percentage points on 2008 (Statistics Korea, 2018[5]).

  • Fourth, the ways in which potential partners meet have changed, but have not properly replaced the role parents once played in arranging or facilitating marriage. In Western countries, many partners meet in or through their work. In Korea, however, long working hours and sex-segregated workplaces often prevent the Korean workplace from playing a similar role.

These factors, among others, combine to create an environment in which it is difficult for young people to meet and marry. Indeed, concern around the difficulties that many young people face in partnering has risen to such an extent that young Koreans today are often referred to as the “sampo generation” – a term, literally meaning “giving up on three”, signifying that a cohort of young Koreans appear to have largely given up on dating, marrying and having children.

2.2.3. An ageing population and falling numbers of traditional couple-with-children households

Korea’s shifting demographics and, in particular, persistently low birth rates will have a profound effect on the future structure of Korean society. Currently, Korea is one of the OECD’s youngest countries, but over just the next couple of decades it will transform into one of its oldest. The median age of the Korean population is set to increase by ten years in the two decades to 2040, from an estimated 43.7 years in 2020, to a projected 53.4 years in 2040 (UN DESA, 2019[6]). Over the same period, the total size of the Korean population will shrink by about 1.5 million, from an estimated 51.3 million in 2020 to 49.8 million in 2040 (UN DESA, 2019[6]). The old-age dependency ratio – the number of people aged 65 and over per 100 working-age adults aged 20-64 – will more than double, from 23.6 in 2020 to 61.6 in 2040 (UN DESA, 2019[6]).

The changing shape of Korean society is already evident in the distribution of different family types. Even 20 years ago, most households in Korea were couple households with children, whereas today, they make up less than one-third of households (Figure 2.4). In their place, single-parent households and especially single-person households have become increasingly common. Data from the Korean census show that, in 1995, just under 13% of households were single-person households. In 2017, they made up just under 29%, and look set to overtake couple-with-children households as Korea’s most common household type in the next few years (Figure 2.4). In the less-than-two decades since the turn of the century, the average size of a Korean household has fallen by 0.6 points, from roughly 3.2 people per household in 2000 to 2.6 people per household in 2017 (Statistics Korea, 2019[1]).

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Figure 2.4. Couple-with-children households now make up less than one-third of Korean households
Distribution of households by household type, Korea, 1995-2017
Figure 2.4. Couple-with-children households now make up less than one-third of Korean households

Source: Statistics Korea 2019, Population Census, http://kosis.kr/statisticsList/statisticsListIndex.do?menuId=M_01_01&vwcd=MT_ZTITLE&parmTabId=M_01_01#SelectStatsBoxDiv.

With continued population ageing these trends are only likely to continue over the coming decades. Projections by Statistics Korea suggest that by 2045, single-person households are likely to form well over one-third (36%) of all households in Korea (Figure 2.5). Over the same period, couple-with-children households are likely to decline to the extent that they make up only 16% of households, with couple households without children expected to be the second most common household type, at around 21% (Figure 2.5). By 2045, the average size of a Korean household is likely to fall by a further 0.4 points, to 2.2 (Statistics Korea, 2019[1]).

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Figure 2.5. More than one-third of Korean households will be single-person households by 2045
Projected distribution of households by household type, Korea, 2020-2045
Figure 2.5. More than one-third of Korean households will be single-person households by 2045

Note: "Other" includes couple households with parents, couple households with parents and children, grandparent(s) and grandchild(ren) households, adults living with their adult brothers, adult sisters, or other relatives, other one-, two- or three generation households, and non-relative multi-person households.

Source: Statistics Korea, Household Projections, http://kosis.kr/eng/.

2.2.4. Increasing educational attainment but stunted progress for women in the labour market

Korea has made remarkable strides in education over recent decades. Less than 20 years ago, the majority of Koreans left education with upper-secondary (high-school) level qualifications or below (OECD Education Database). Today, in contrast, the overwhelming majority progress to and graduate from tertiary (university) level education. Indeed, the share of young Koreans (25- to 34-year-olds) that have attained tertiary education has almost doubled since the turn of the century, rising from 36.8% in 2000 to 69.8% in 2017 (OECD Education Database). This is the highest share of young people with tertiary education in the OECD (Figure 2.6).

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Figure 2.6. Young people in Korea are the most highly educated in the OECD
Distribution of young people by level of educational attainment, 25- to 34-year-olds, OECD countries, 2017
Figure 2.6. Young people in Korea are the most highly educated in the OECD

Note: Data for Chile refer to 2015.

Source: OECD Education Database, https://www.oecd.org/education/database.htm.

Progress in educational attainment has been particularly strong for women. 15-year-olds girls in Korea are some the best performers on the OECD’s Programme for International Student Assessment (PISA) reading, mathematics and science tests (OECD, 2016[7]), and young Korean women are now the most likely in the OECD to graduate from university. As of 2017, fractionally under three-quarters (74.9%) of 25- to 34-year-old women in Korea had attained tertiary education (OECD Education Database). This is ten percentage points higher than the share among 25- to 34-year-old Korean men (65.1%), and almost 25 percentage points higher than the OECD average for 25- to 34-year-old women (50.7%), though as elsewhere in the OECD, Korean women are much less likely than Korean men to study the lucrative science, technology, engineering and mathematics (STEM) subjects. In 2017, just 26% of STEM graduates in Korea were women (OECD Education Database)

Korean women’s gains in education have not yet been matched by similar progress in the labour market. Employment rates for Korean women have risen over the past few decades; in 2018, 57.2% of Korean women aged 15-64 were in paid employment, up 7 percentage points on 2000 (50.1%) and 13 percentage points on 1980 (44.6%) (OECD Employment Database). Yet, they remain far lower than employment rates for Korean men. In 2018, the gender employment gap among 15- to 64-year-old Korean men and women remained close to 20 percentage points, the fourth highest gap in the OECD and well above the OECD average of 11 percentage points (OECD Employment Database).

One issue in Korea is that women are still expected to leave paid work upon motherhood (see Chapters 3 and 5). Women’s employment rates drop by over 10 percentage points between the ages of 25-29 and 35-39 (Figure 1.7 in Chapter 1), as women enter marriage or parenthood. Moreover, when Korean women return to work after becoming parents, they often struggle to progress in their careers. Korean women are disproportionately likely to find themselves in precarious non-regular employment, where wages are comparatively low, social security coverage is limited, and opportunities for moving up the career ladder are scarce (Chapter 3). Korea’s long working hours, which are still among the longest in the OECD (OECD Employment Database), also place heavy demands on women workers that are difficult to tally with family responsibilities (Chapter 3).

2.2.5. The looming decline in the size of the labour force

Korea’s shifting demographics carries significant challenges, not least for the future of the Korean economy. All else equal, the shrinking and ageing of the Korean population will soon lead to a decline in the number of workers available on the labour market. OECD projections suggest that, on current trends, the total size of the Korean labour force is set to decline by about 2.5 million workers over the next couple of decades, from an estimated 27.5 million in 2020, to a projected 25.0 million in 2040 (Figure 2.7). This will have major implications for economic performance. The combination of a shrinking labour force and an ageing population will also put considerable pressure on public finances, as demand for government spending on health care and pensions grows while the available workforce declines.

However, the good news is that, in its highly educated female population, Korea has a skilled and currently under-used reserve of labour. OECD projections suggest the expected decline in the size of the Korea labour force over the next couple of decades could be more than offset by boosting women’s labour force participation to the point where it matches men’s participation by 2040 (Figure 2.7). Moreover, given that young Korean women are so exceptionally well qualified, bringing more women into the labour force would help boost employed levels of human capital, in turn, potentially driving productivity growth and improving economic performance.

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Figure 2.7. Closing the gender participation gap could mitigate the looming decline in the size of the Korean labour force
Projected total labour force size (1000s) under different gender participation gap scenarios, 15- to 74-year-olds, Korea, 2016-2040
Figure 2.7. Closing the gender participation gap could mitigate the looming decline in the size of the Korean labour force

Notes:

A: Baseline: labour force participation rates of men and women (15-74) are estimated (by gender and five-year age groups) based on current (2007-16) rates of labour market entry and exit.

B: 25% by 2025 and 50% by 2040: male participation rates are held at the baseline; female participation rates are projected so that the gender participation gap within each five-year age group in 2012 falls by 25% by 2025, and 50% (i.e. is halved) by 2040.

C: 50% by 2025 and 100% by 2040: male participation rates are held at the baseline; female participation rates are projected so that the gender participation gap within each five-year age group in 2012 falls by 50% by 2025, and 100% (i.e. is fully closed) by 2040.

Source: OECD estimates based on OECD population data and the OECD Employment Database (http://www.oecd.org/employment/emp/onlineoecdemploymentdatabase.htm).

copy the linklink copied!2.3. Changing attitudes

Across the OECD, developments in family structures and behaviours have been accompanied by changing norms, values, and attitudes towards marriage, parenthood, and gender roles. Cross-national time-series data on attitudes towards the family are unfortunately rare, but data from sources like the International Social Survey Programme (ISSP) – an international survey that runs a module on views on family and gender roles every ten years or so – helps illustrate how views have changed over time. For example, results from the ISSP show that opposition to unmarried couples having children has weakened over the last few of decades. Between 1994 and 2012, on average across the 14 OECD countries with data available for both years, the share that agree (or strongly agree) with the statement “People who want children ought to get married” has decreased just over 13 percentage points, from 58% to 45% (ISSP, 2019[8]). Views on men and women’s roles within the family have shifted too. Over the same period and across the same 14 countries, the average share that agreed (or strongly agreed) that “A man's job is to earn money; a woman's job is to look after the home and family”’ fell by one-third, from 31% in 1994 to 21% in 2012 (ISSP, 2019[8]).

Compared to populations in many other OECD countries, Koreans are still relatively likely to express traditional views on the family. Data from the 2012 wave of ISSP, show that Koreans are more likely than respondents in almost all other OECD countries to disagree with progressive statements such as “It is all right for a couple to live together without intending to get married?” (Figure 2.8). Comparatively high numbers also express traditional views on women’s roles within the household – in 2012, 78% of Koreans agreed that ”A job is all right, but what most women really want is a home and children”, compared to 47% on average across OECD countries (ISSP, 2019[8]) – and on the impact of women’s employment on the family. In 2012, just over 60% of Koreans agreed that “All in all, family life suffers when the woman has a full-time job”, compared to 37% on average across OECD countries (ISSP, 2019[8]).

Yet, there are signs of changing attitudes in Korea. As outlined in the following sub-sections, time-series survey data from Korea suggest that Koreans today are placing much less weight on issues like marriage and parenthood than they were just a couple of decades ago. Increasingly, Koreans are seeing both as more of a choice and less of an obligation. There is also evidence of increasingly egalitarian attitudes towards the division of unpaid work within household. However, progress on attitudes towards women’s work is mixed; while there is growing opposition to the male breadwinner family model, many Koreans continue to believe that men’s jobs and careers should take precedence over women’s.

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Figure 2.8. Koreans are more likely to disapprove of unmarried couples living together than people in almost all other OECD countries
Distribution of responses to the question "It is all right for a couple to live together without intending to get married?", all ages, OECD and key partner countries, 2012
Figure 2.8. Koreans are more likely to disapprove of unmarried couples living together than people in almost all other OECD countries

Note: Respondents who refused to answer or who answered "don't know" are excluded.

Source: OECD estimates based on the International Social Survey Programme (ISSP) 2012, http://w.issp.org/menu-top/home/

2.3.1. Declining weight placed on marriage

Marriage has a history as a strong social institution in Korea. Rooted in the Confucianist principles of different but mutual responsibilities and obligations, marriage and the family traditionally formed a firm cornerstone in Korean society. Even as recently 1998, one-third of Koreans believed that marriage is a “must do” – in other words, that marriage is an obligation (Figure 2.9). A further 40% expressed the slightly weaker view that marriage is something that is “better to do” (Figure 2.9). However, while marriage remains important for family life in Korea, there are signs that its centrality is weakening. In 2018, almost half of the Koreans expressed indifference towards marriage (Figure 2.9). Just over one-third still said it is something that is “better to do” (37%), but only a small minority (11%) considered it an obligation.

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Figure 2.9. Fewer Koreans feel obliged to marry now than two decades ago
Distribution of responses to the question "What do you think about marriage?", total population, Korea, 1998-2018
Figure 2.9. Fewer Koreans feel obliged to marry now than two decades ago

Note: Population aged 15 and over between 1998-2006, and aged 13 and over from 2008.

Source: Korea Social Survey, Statistics Korea, http://kosis.kr/eng/

Younger Koreans and those with high levels of educational attainment are the least likely to view marriage as an obligation (Figure 1.3 in Chapter 1). According to data from the Korean Longitudinal Survey of Women and Families (KLOWF), in 2016, fewer than 40% of Korean women aged 19-29 agreed (or strongly agreed) with the statement “marriage is a must-do for everyone,” compared to almost 70% among women aged 50 or older (Figure 1.3 in Chapter 1). Similarly, fewer than half of Korean women with tertiary education agreed (or strongly agreed) that marriage is a “must-do” for everyone, compared to three-quarters of Korean women with only lower-secondary qualifications or below.

The declining belief in marriage as an obligation is having a real impact on Koreans’ partnering behaviours. On top of the decline in actual marriage rates highlighted in Section 2.2.2, data from the KLOWF suggest that unmarried women in Korea are much less likely to express an explicit intention to marry now than they were even a decade ago. Between 2008 and 2016, the share of unmarried women in Korea stating that they intended to marry fell by 33 percentage points, from 77.1% to 43.9%. Over the same period, the share stating they had no intention to marry increased from 13.5% to 22.6%, while those that said they had simply “never thought about” marriage grew by 24 percentage points, from 9.4% to 33.5%. Again, the trend is clearest among young Koreans – in 2016, more than 40% of young (19- to 29-year-old) Korean women said they had never thought about marriage, roughly four times higher the share who said the same in 1998 (9.7%) (Korean Longitudinal Survey of Women and Families, each year[9]).

2.3.2. A shift towards parenthood as a choice, and away from elderly care as an obligation

Alongside changing norms and attitudes towards marriage, views around parenthood and family obligations have also changed in Korea in recent years. Increasingly, Koreans are seeing parenthood as a choice rather than an obligation – as something that they would like to do, rather than they must do (Figure 2.10). For example, according to data from the National Survey on Fertility, Family Health & Welfare in Korea, the share of married Korean women of parenting age who believe that they “must have” their own children has fallen by over a third since the mid-1990s, from just over three-quarters (78.4%) in 1994 to one-half (49.9%) in 2018. Over the same period, the share who express a slightly more moderate view on the importance of having their own children (that it is something that is “better” to do) more than doubled, from 14.0% in 1994 to 32.8% in 2018. The share who think it is not a problem if they do not have their own children also increased, from 7.5% in 1994 to 16.9% in 2018.

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Figure 2.10. Married women in Korea increasingly see parenthood as a choice, rather than an obligation
Distribution of responses to the question “Do you think you have to have your own child(ren)?”, married women, Korea, 1991-2018
Figure 2.10. Married women in Korea increasingly see parenthood as a choice, rather than an obligation

Note: Data for 1991, 2015 and 2018 cover married women aged 15-49. Data for 1994-2012 cover married women aged 15-44. In 1991, "Must have" and "Better to have" are combined. In 2012, husbands could answer on behalf of their wives if their wives were absent when the survey was conducted.

Source: National Survey on Fertility, Family Health & Welfare in Korea.

It is not just attitudes towards children and parenthood that are changing in Korea – those towards elderly parents are shifting too. More than in most other OECD countries, Korean society historically placed great weight on the role of the family in caring for elderly relatives. Indeed, as recently as the early 2000s, close to three-quarters (70.7%) of Korean adults believed that family should take full responsibility for the care of elderly parents (Figure 2.11). This has changed dramatically since then. By 2018, as few as just over one-quarter (26.7%) continued to believe that family should take full responsibility for elderly parents. In their place, increasing numbers believe that elderly parents should be self-sufficient (19.4% in 2018) and, more so, that family, the government and wider society should share the responsibility for elderly care (48.3%) (Figure 2.11).

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Figure 2.11. Many Koreans no longer believe that family should take full responsibility for the care of elderly parents
Distribution of responses to the question "Who do you think should mainly take care of your parents in their old age?", total population, Korea, 2002-2018
Figure 2.11. Many Koreans no longer believe that family should take full responsibility for the care of elderly parents

Note: Population aged 15 and over between 1998-2006, and aged 13 and over from 2008.

Source: Statistics Korea, Korean Social Survey, http://kosis.kr/eng/.

2.3.3. Increasingly progressive views on who should do the housework, but only a partial shift towards full acceptance of women in the labour market

Underneath changing attitudes towards the family, lie shifts in views on and perceptions of appropriate gender roles. As everywhere else in the OECD, women in Korea remain economically disadvantaged. They are less likely to be employed than men are and, when they do participate in paid work, they tend to earn much less than men too (see Chapter 3). Inside the home, Korean women continue to conduct the lion’s share of unpaid work. Indeed, time-use data from 2014 show that, on average, Korean women still do close to three hours more unpaid work each day than Korean men do (Chapter 3).

Yet, also as elsewhere in the OECD, there is evidence to suggest that views on women’s roles in society are changing in Korea. These shifts are clearest when looking at attitudes towards the gender distribution of unpaid work. According to data from the Korean Social Survey, even as recently as 2008, two-thirds of Koreans believed that unpaid work within an opposite-sex married couple should be done entirely (6.7%) or mostly (59.8%) by the wife (Figure 2.12). By 2018, this had fallen to not far over one-third (3.8% and 34.6%, respectively), with the majority of Koreans stating that both partners should share unpaid work equally (59.1%). Data from other surveys show similar results. For example, results from the 2016 wave of the KLOWF show that approximately 85% of women (aged 16-64) believe “Dual-earning couples need to share housework equally (Korean Longitudinal Survey of Women and Families, 2016[10]). Similarly, data from 2015 wave of the National Survey on Fertility, Family Health & Welfare in Korea suggest as many as 80% of married women (aged 15-49) and 88% of unmarried women (aged 20-44) agree (or strongly agree) that “Men need to share housework with their wives more equally than they do now.” (Korea National Survey on Fertility, Family Health and Welfare, 2015[11]).

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Figure 2.12. Koreans increasingly favour sharing housework equally
Distribution of responses to the question "How do you think housework should be shared?", total population, Korea, 2008-2018
Figure 2.12. Koreans increasingly favour sharing housework equally

Note: Population aged 13 and over.

Source: Statistics Korea, Korean Social Survey, http://kosis.kr/eng/

Not surprisingly, progressive views on the distribution of unpaid work are most common among younger Koreans. Data from the Korean Social Survey show that, in 2018, 82% 20- to 29-year-olds believed partners in a married couple should share unpaid work equally (Statistics Korea, 2018[5]). This is up from 53% in 2008. Levels are lower among older Koreans and those with lower educational attainment. However, there has been progress here too. For example, the share of Koreans aged 65 and over that believe married couples should share unpaid equally doubled between 2008 and 2018, from 21% to 42%. Similarly, over the same period, the share of Koreans with lower-secondary level education that believe that married couples should share unpaid equally increased from 40% to 60% (Statistics Korea, each year[12]).

The evidence on progress in attitudes towards women and paid work is mixed. On the one hand, some results suggest growing opposition to the traditional male breadwinner model. For instance, data from the 2018 wave of the National Survey on Fertility, Family Health & Welfare in Korea show that roughly 73.9% of married women (aged 15-49) and 90.5% of unmarried women (aged 20-44) disagree (or strongly disagree) with the statement “A man’s job is to earn money, and a woman’s is to look after the family and home(Korea National Survey on Fertility, Family Health and Welfare, 2018[13]). Results from an equivalent question in various waves of the Korea Welfare Panel Study (KOWEPS), point in a similar direction with the numbers expressing a negative view of the male breadwinner model having grown considerably since 2007 (Korea Welfare Panel Study, 2016[14]).

However, considerable numbers of Koreans continue to believe that men’s careers should take precedence over women’s careers. In 2012, according to the National Survey on Fertility, Family Health & Welfare in Korea, more than one in five married Koreans aged 15-64 (21.5%) believed that women should be dismissed before men in an economic recession (Korea National Survey on Fertility, Family Health and Welfare, 2015[11]). In 2018, a little less than half (45.8%) of married women (aged 15-49) agree (or strongly agree) with the statement “It is more important for a wife to help her husband develop his career development than to develop her own career(Korea National Survey on Fertility, Family Health and Welfare, 2018[13]). This is considerably lower than the share expressing the same view in 2012 (66.4%), so there are clear signs of progress, but those numbers remain very high. Large numbers of Koreans also continue to express negative views of women entering paid work while children are young. Data from the 2016 wave of the KLOWF show that 59% of women (aged 16-64) agree that “A mother working while she has a pre-school age child will have a negative effect on the child”, down only two percentage points on 2007 (60.5%) (Korean Longitudinal Survey of Women and Families, 2016[10]).

copy the linklink copied!2.4. Changing family supports

Family supports have become a core part of national social protection systems in OECD countries over recent decades. All OECD countries use public family benefits and services to provide support to families with children in at least some form, though the types and intensity of supports offered often differ considerably. Differences in countries’ histories, their attitudes towards families, the role of government and the relative weight given to the various underlying family policy objectives all mean that each take their own approach to family support. Some OECD countries, most notably the Nordic countries, offer extensive, universalised systems that provide parents with a continuum of support from birth right through until when children leave school. In these countries, parents are offered generous paid leave when children are very young, leading to a place in subsidised day care, pre-school, and out-of-school-hours care services once children enter full-time education. Other countries (for example, the United Kingdom and United States) give a greater role to targeted benefits aimed at achieving specific objectives or directed at specific groups, such as single-parent families or families on low incomes.

In comparison to most OECD countries, family supports in Korea are a relatively recent development. Like many countries in East Asia, Korea historically emphasised the role of the family in providing care and social welfare services. The family was responsible for the well-being of family members, with the role of the government to step in only where the family could not. Thus, until recently, family benefits in Korea were minimal and limited largely to means-tested supports targeted only at the most disadvantaged families. Even as late as 2005, Korean public spending on family cash and in-kind benefits reached only roughly 0.25% of GDP – together with Turkey, the lowest in the OECD at the time, and less than a tenth of the outlay of the biggest spenders like Denmark and France (Figure 2.13,Panel A).

However, over the last decade or so Korea has transformed its approach to family benefits and its system of family support. Responding to concerns around its low birth rate and ageing population, since the mid-2000s, Korea has adopted a series of five-year action plans (the “Basic Plans on Low Fertility and Ageing Society”) aimed at promoting fertility and making parenthood more compatible with paid work. Two Plans have been completed so far – the first (2006-10) concentrating largely on measures to help balance work and family life, most notably paid leave entitlements, and the second (2011-15) on extending subsidised early childhood education and care. A wide-ranging third Basic Plan – which is broader in orientation and looks to tackle societal and cultural drivers of low fertility, in addition to economic drivers like childcare costs, education costs and housing costs – was initiated in 2016, while a bridging roadmap was announced at the end of 2018 (Chapter 1).

The reforms introduced through Korea’s Basic Plans have produced a system of family support that in several respects compares favourably to many other OECD countries. Public expenditure on families has grown more than tenfold since the early 2000s, and now sits at a level comparable to countries such as Japan and Portugal (Figure 2.13). Public childcare support in particular is comparatively generous. All children under school-age are now covered by an extensive system of financial supports, producing some of the lowest out-of-pocket childcare costs in the OECD (Chapter 4). The paid leave system is theoretically extensive, and together with Japan, features the longest individual entitlement to fathers’ leave in the OECD. However, many fathers are not eligible, and after the first three months, payment rates are not high and take-up remains low (Chapter 3). Cash benefits and other measures to support families’ living standards are less developed – presently, Korean families rely largely on a patchwork of financial supports delivered through the tax system or by local governments. The introduction in 2018 of a new child allowance for young children – as well as the expansion in 2019 of the refundable earned-income and child care tax credits – go some way towards addressing this gap, though there is still more to be done (see Section 2.4.1).

Chapters 3 and 4 of this report discuss and assess the development of Korea’s parental leave and childcare systems, respectively. The remainder of this chapter concentrates on the development of Korea’s system of cash benefits and financial supports for families.

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Figure 2.13. Public spending on families has grown rapidly in Korea over the past decade and a half
Figure 2.13. Public spending on families has grown rapidly in Korea over the past decade and a half

Note: Public spending accounted for here concerns public support that is exclusively for families (e.g. child payments and allowances, parental leave benefits and childcare support), only. Spending in other social policy areas such as health and housing support also assists families, but not exclusively, and is not included here. The data in Panel A cover public expenditure on family cash and in-kind benefits only, and do not include spending on tax breaks for families. Data for the Netherlands and New Zealand refer to 2011, and for Poland to 2014. For Lithuania, data on tax breaks towards families are not available. The OECD-32 average excludes Lithuania, the Netherlands, New Zealand, and Poland.

Source: OECD Family Database, http://www.oecd.org/els/family/database.htm

2.4.1. Changing financial supports for families

Cash transfers and other measures to provide financial assistance to families represent a major pillar of the national family policy packages in most OECD countries. All OECD countries provide financial support to families in one form or another, though the design and means of delivery are diverse. Depending on the country, these supports are used to pursue a variety of different objectives, ranging from boosting birth rates to reducing child poverty and promoting child well-being. However, in all cases, the broad aim is to increase families’ standards of living and support families with the costs of raising children.

Financial supports for families can be separated into two main types. First, are family-related cash benefits, most often taking the form of child allowances (also known as child benefits or family allowances). Almost all OECD countries provide at least some kind of family or child allowance through a cash transfer targeted at children or families with children (OECD Family Database). These allowances often sit at the centre of the national family support package, and in many cases represent a major expenditure item – indeed, on average, in 2015, OECD countries spent roughly 0.7% of GDP on family or child allowances (OECD Social Expenditure Database), equivalent to more than one-third of all public expenditure on families (not including expenditure on tax breaks). Rules regarding the exact amounts provided vary widely, with payments frequently increasing or decreasing with both the age of the eligible child and the size of the family in which the child lives. In roughly half of OECD countries, child allowances are means-tested with eligibility restricted to children living in families with incomes under a certain threshold, and several benefits are reduced as household income increases (OECD Family Database).

The second main type is tax-based financial support for families. Over three-quarters of OECD countries provide some kind of family-related financial support through the tax system. Most often this concerns a child tax allowance (e.g. Austria, Belgium, Hungary, Slovenia, Switzerland) that is deducted from gross taxable income, or child tax credits (e.g. Finland, Germany, Italy, Poland, Portugal, the Slovak Republic, the United Kingdom, the United States) that reduce the final income tax liability (OECD Family Database). In many countries, the amounts directed through tax breaks for families are relatively small in comparison to the amount spent on family cash benefits (Figure 2.14). However, in France, Hungary, and Italy more than 0.5% of GDP is provided to working families through tax breaks and tax credits. In Germany and the Czech Republic, public spending on tax breaks for families reaches not far off 1% of GDP (Figure 2.14).

Historically, in comparison to other OECD countries, Korea has provided relatively little in the way of cash supports for families. As recently as 2015, excluding maternity, paternity and parental leave, Korea spent only 0.36% of GDP on family financial supports through cash benefits and tax breaks. This was the smallest share of GDP spent by any OECD country other than Turkey. To a greater extent than in most OECD countries, Korean families have historically relied on market earnings for their income, supported at times by a patchwork of relatively small financial supports delivered through the tax system (see below) or by local governments (see Box 2.2).

However, Korea is taking steps to expand and improve its package of family cash supports. Over the last decade or so, Korea has introduced several new child- or family-related tax breaks and supports with the aim of providing financial assistance to families with children. These range from a standard child tax allowance providing a deduction on gross taxable income, to a per-child non-refundable tax credit for all taxpayers and a per-child refundable tax credit for low-income families. More recently, in September 2018, the Korean government introduced a nationwide cash child allowance for the first time. In comparative terms, these measures are fairly modest and small in scale, with the amounts provided relatively low compared to some equivalent measures in other OECD countries (see below). Nonetheless, these are movements in the right direction.

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Figure 2.14. Korea spends very little on cash and tax supports for families
Public expenditure on cash benefits for families (excluding maternity and parental leave allowances) and tax breaks for families, as a % of GDP, OECD countries, 2015
Figure 2.14. Korea spends very little on cash and tax supports for families

Note: Public spending accounted for here concerns public support that is exclusively for families (e.g. child and family cash benefits and tax credits), only. Spending in other social policy areas such as health and housing support also assists families, but not exclusively, and is not included here. Data for the Netherlands and New Zealand refer to 2011, and for Poland to 2014. For Switzerland, data on tax breaks for families are estimated by the OECD Social Expenditure Database national correspondent. The OECD-32 average exclude Lithuania, the Netherlands, New Zealand, and Poland.

Source: OECD Family Database Indicator PF1.1, http://www.oecd.org/els/family/database.htm, and OECD Social Expenditure Database, http://www.oecd.org/social/expenditure.htm.

Child tax allowance

In Korea as in many other OECD countries, all taxpayers are entitled to receive a flat-rate child tax allowance for dependent children that can be deducted from gross taxable income. In 2018, the amount of the deduction was KRW 1 500 000 (USD 1364) per child per year – equivalent to roughly 3.2% of the 2018 average full-time wage (AW)1 – and was available for each and every dependent child aged 0-20 as long as their own taxable income was less than KRW 1 000 000 (USD 909).

Tax credit for children and tax credit for education expenses

In 2014, the Korean government introduced a new tax credit for children – a non-refundable tax credit, to be deducted from the final tax bill, for taxpayers with dependent children aged 0-20. The tax credit is paid per child, with amounts that vary with family size – higher payments are available from the third child on. In 2015, the tax credit was expanded to include a small non-refundable supplement for families with at least two children aged 0-6 years, and a new bonus payment for any births or adoptions occurring in the relevant tax year, although this has since been abolished following the introduction in 2018 of the new child allowance (see below). In 2018, the tax credit for children was worth KRW 150 000 (USD 136) per child per year for the first and second child and KRW 300 000 (USD 273) per child per year from the third child on. For a family with two children aged 2 and 3, the tax credit is worth KRW 300 000 (USD 273) per year – equivalent to roughly 0.6% of the 2018 AW.

On top of the tax credit for children, families with children can claim an additional non-refundable credit, the tax credit for education expenses, for child-related education spending. The credit can be claimed for education-related expenses such as tuition fees, out-of-school-hours education and care fees, school meals, textbooks, field trips and school uniforms. For young children not yet attending primary school (0-7 year-olds), the credit can also be used for fees paid to childcare facilities, kindergarten and other private education institutions. The credit covers 15% of family expenditure on education expenses, up to a maximum of KRW 3 000 000 (USD 2727), for each child aged 0-17 (the threshold is higher for older children attending higher education). The maximum that can be claimed per child is KRW 450 000 (USD 409) per year, equivalent to just under 1% of the 2018 AW.

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Box 2.2. Financial supports provided by local governments in 2019

In addition to financial supports provided by the national government, some local governments in Korea also provide financial assistance to families with children, most frequently through birth grants, child allowances, and local tax breaks for families with new-born children. For example, all local governments in Seoul provide birth grants, with amounts that vary widely from KRW 100 000 (USD 91) to KRW 5 000 000 (USD 4 545) according to birth order. Similarly, each local government in Gyeonggi Province provides local birth grants ranging from KRW 50 000 (USD 45) for a first child to KRW 20 000 000 (USD 18 182) for a fifth child. Some local governments also provide childcare allowances to families with children. For example, Gangwon Province provides an allowance worth KRW 300 000 (USD 273) per month for up to four years. Often, birth grants are most generous in areas where birth rates are lowest and populations are ageing most rapidly. For example, Moongyung-shi in Gyungnam Province has a birth-grant worth KRW 3 400 000 (USD 3 091) for the first child and KRW 30 000 000 (USD 27 273) from the fourth child on. Boryung-shi in Chungnam Province provides grants worth KRW 1 000 000 (USD 909) for the first child up to KRW 30 000 000 (USD 27 273) for the fifth child.

Earned-income tax credit and child care tax credit

In addition to the child tax allowance and the tax credit for children, the Korean government also provides the earned-income tax credit – a refundable/non-wastable means-tested in-work tax credit targeted at low-income households. When first introduced in 2008, the credit was available only to poor households with children, though in 2011, eligibility was widened to some other household types, such as couples without children and single people aged 30 or over. The credit is means-tested on both income and assets, with eligibility thresholds that vary according to household type. In 2018, the annual income thresholds ranged from KRW 13 000 000 (USD 11 818, or about 27.5% of the 2018 AW) for a single-person household to KRW 25 000 000 (USD 22 727, or about 52.8% of the 2018 AW) for a dual-earner household, with the asset value threshold set at KRW 140 000 000 (USD 127 273). The actual amounts paid by the earned-income tax credit are tapered with income, and also vary by household type. In 2018, the maximum amounts available were KRW 850 000 (USD 773, or 1.8% of the 2018 AW) per year for a single-person household, and KRW 2 500 000 per year (USD 2 273, or 5.3% of the 2018 AW) for a dual-earner household (National Tax Service, 2019[15]). In 2017, just under 1 700 000 households received the earned-income tax credit (National Tax Statistics, 2018[16]).

Importantly, parameter adjustments in 2019 will see the reach and scope of the earned-income tax credit expand considerably. The general structure of the tax credit will remain the same. However, the earnings thresholds on the means test will increase by roughly 50%, to 20 000 000 (USD 18 182, or 42.2% of the 2018 AW) for a single person household, and to KRW 36 000 000 (USD 32 727, or 76.0% of the 2018 AW) for a dual-earner household. The payment ceiling will also increase considerably: the cap for a single-person household will be set at KRW 1 500 000 (USD 1 364, or 3.2% of the 2018 AW) per year, and for a dual-earner household at KRW 3 000 000 (USD 2 727, or 6.3% of the 2018 AW) per year. These adjustments will help expand the number of families eligible for the earned-income tax credit, and will increase its value for many families too.

On top of this main earned-income tax credit, in 2015 the Korean government introduced a second refundable tax credit, the child care tax credit, for low-income households with dependent children. Similar to the main earned-income tax credit, the child care tax credit is means-tested on both income and assets: in 2018, the annual income threshold was KRW 40 000 000 (USD 36 364, or about 84.5% of the 2018 AW), and the asset value threshold was KRW 200 000 000 (USD 181 818). The amount paid also varies with income and household type, with the credit tapered up to a maximum of KRW 500 000 (USD 455) per child per year – roughly 1.1% of the 2018 AW – rising to KRW 700 000 (USD 636) in 2019. In 2017, the child care tax credit was claimed by about 900 000 households (National Tax Statistics, 2018[16]).

The new child allowance

In light of previously being one of the few OECD countries without some form of national child or family allowance cash transfer scheme and with a view to reducing the costs of raising children and increasing families’ standards of living, in September 2018, the Korean government introduced a new cash child allowance for families with young children. Korea had previously discussed the possibility of introducing a child allowance for several years, especially after the establishment of the first Basic Plan in the early-2000s. Concerns around the costs of a new allowance led to delays and the rejection of several bills during the first half of the 2010s. However, following the election of President Moon JaeIn in May 2017, the government initiated the implementation of a new child allowance.

Korea’s new child allowance provides a monthly cash benefit paid at a flat-rate of KRW 100 000 (USD 91) per child per month, or about 2.5% of the 2018 AW. When first introduced in 2018, the allowance was means-tested, with households on incomes at or above the 90th percentile of the income distribution not eligible. However, this means test was abolished in January 2019. Eligibility is currently restricted to children aged 0-6, only. This is a much smaller age range than in most other OECD countries, where child or family allowances are often available up until children reach 16 or 18 years of age – and sometimes later, for those still in education (OECD Family Database).

In comparison to the child allowances available in other OECD countries, Korea’s new allowance is moderate in its generosity (Figure 2.15). Its 2.5% gross payment rate is lower than in some OECD countries, such as Germany, where the main child allowance (Kindergeld) is worth 4.6% of the 2018 AW, or Canada, where Canada’s Child Benefit is worth up to 12% of the 2018 AW, depending on household income. However, the payment rate is about the same as the main child allowances in Finland, Sweden and the United Kingdom, and higher than the main allowances in countries like France, Japan, the Netherlands and Norway.

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Figure 2.15. Korea's new child allowance is moderate in comparison to other OECD countries
Gross payment rates for main child allowances, eldest child in two-child couple family, age 5, as a % of national average full-time earnings (AW), selected OECD countries, 2018
Figure 2.15. Korea's new child allowance is moderate in comparison to other OECD countries

Note: Data refers to the value of the main/primary child/family allowance/child benefit in the given country, expressed as a% of national average earnings for full-time, full-year workers, before the payment of any taxes/social contributions or the effects on any other benefits are taken into account (AW). Payment rates sometimes vary with age of the eligible child and the size and status of the family in which the child lives. The data shown assume the relevant child is age 5 and is the eldest child in two-child, two-parent family. Where eligibility for the main child/family allowance/child benefit is subject to a means test, it is assumed that the family pass this test and remain eligible for the (full) benefit. An * marks countries where payments are subject to a mean-test.

Source: OECD estimates based on information from the OECD Family Database, http://www.oecd.org/els/family/database.htm, and OECD Tax-Benefit Models, http://www.oecd.org/social/benefits-and-wages.htm

Estimates produced using the OECD’s tax-benefit models (Box 2.3) suggest Korean’s new child allowance will have a positive if modest effect on net family income (Figure 2.16). Lower-earning families gain the most, especially in relative terms. For example, for a single-earner couple family with two children (age 2 and 3) earning 50% of the 2018 AW, the new allowance leads to an increase in net family income of KRW 2 400 000 (USD 2 182) or 5.1% of the 2018 AW wage (Figure 2.16) – exactly the cash value of the new child allowance for two children. This is equivalent to a boost in net family income of 8.3% relative to the situation before the introduction of the new allowance.

Higher-earning families gain less from the new child allowance, both in absolute and in relative terms (Figure 2.16). For example, for a dual-earner two-child family earning 100% + 50% of the 2018 AW, the new allowance leads to an increase in net family income of KRW 2 235 000 (USD 2 032) or about 4.7% of the 2018 AW. This is because the increase in gross income provided by the new allowance is slightly offset by the loss of the small supplementary child tax credit previously available only to higher earning families (see above).2 The net effect for this family type is a 3.5% boost in net income relative to the situation before the introduction of the new allowance.

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Figure 2.16. Korea's new child allowance provides a modest income boost for families with young children, especially for those on low incomes
Net household income for a couple family with two children aged 2 and 3, by earnings level, by income/expenditure source, before and after accounting for Korea's new child allowance, as a % of average full-time earnings (AW), Korea, 2018
Figure 2.16. Korea's new child allowance provides a modest income boost for families with young children, especially for those on low incomes

Note: Data refer to net household income for a couple family with two children (aged 2 and 3), decomposed by income/expenditure source, before and after accounting for the abolition of the supplementary child tax credit and the introduction of Korea's new child allowance using the parameters in place as of January 2019. With the exception of the single-earner couple, both children are assumed to attend centre-based childcare full-time, defined as care for at least 40 hours per week. All parents are assumed to work full-time earning the mentioned percentage of national average full-time earnings, except for the single-earner couple, where only one parent works full-time earning 50% of average full-time earnings. Average full-time earnings/the average full-time wage (AW) refers to the average gross wage earnings paid to full-time, full-year workers, before deductions of any kind (e.g. withholding tax, income tax, private or social security contributions and union dues). See Box 2.3, Box 2.4 and the OECD Tax and Benefit Systems website (http://www.oecd.org/social/benefits-and-wages/) for more detail on the methods and assumptions used and information on the policies modelled for each country.

Source: OECD estimates based on the OECD Tax-Benefit Models, http://www.oecd.org/social/benefits-and-wages.htm

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Box 2.3. What are the OECD Tax-Benefit models?

The OECD tax-benefit models calculate tax burdens, benefit entitlements and net incomes for a range of different labour market and household situations. They simulate assessments of different families’ tax liabilities and benefit entitlements using a detailed representation of relevant policy rules and parameters (including tax rates, benefit eligibility criteria, and any rules determining the interaction of relevant policy areas, such as whether some benefits are taxable or not). On the tax side, simulated payments include income taxes and mandatory contributions to public or private social insurance schemes. On the benefit side, calculations account for all cash transfers that are typically available to able-bodied working-age individuals and their families: unemployment benefits, social assistance, housing benefits for rented accommodation, other minimum-income benefits, family benefits, and in-work transfers.

The tax-benefit models are regularly used to produce a range of indicators for policy monitoring and analysis. They include work-incentive measures (e.g. marginal effective tax rates) and indicators of income adequacy (e.g. the net income of benefit recipients or low-wage workers relative to commonly used poverty thresholds). Further information on the OECD’s tax-benefit models can be found on the OECD Tax and Benefit Systems website (http://www.oecd.org/social/benefits-and-wages.htm).

2.4.2. The current tax-benefit position of families in Korea

In comparison to many other OECD countries, Korea continues to operate a relatively low-tax/low-benefit approach to tax and benefit policies, with families both paying out little in income tax and social contributions, and receiving relatively little in social cash benefits (Figure 2.17).

On the one hand, Korean families often pay very little in the way of income tax or social contributions, especially when they are low earners. For example, in Korea, the total tax bill (including both income tax and social contributions) for a single-earner couple with two children (age 2 and 3) on 50% of the 2018 AW (about KRW 24 000 000) comes to only around 8% of the family’s gross market income (roughly KRW 2 000 000). This is around or less than half the bill faced by an otherwise similar family in countries like France, Germany, Japan, Norway, the Netherlands and Sweden. It is almost one-tenth of the bill faced by a similar family in Denmark (Figure 2.17, Panel A).

At the same time, however, Korean families tend to receive relatively little in social benefits, even when they are low earners. This remains the case despite the introduction of the various family-related cash and tax supports outlined in the previous section. Families with older children receive particularly few benefits, in part because they are not eligible for the new child allowance. For example, a single-earner family with two children aged 14 and 15 on 50% of the 2018 AW (about KRW 24 000 000) receives benefits worth roughly only 10% of the 2018 AW (Figure 2.17, Panel B). This is made up of child care tax credit payments worth just under 2% of the 2018 AW (KRW 940 000), plus housing benefit payments. Despite being only low, this family’s income is too high to qualify for the earned-income tax credit at the 2018 thresholds, and the children are too old to be eligible for the child allowance.

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Figure 2.17. Low-income families in Korea receive only a comparatively small share of their income through public cash benefits, especially when children are older
Net household income for a single-earner couple family with two children and one parent earning 50% of average full-time earnings, by child age, by income/expenditure source, as a % of average full-time earnings, OECD countries, 2018
Figure 2.17. Low-income families in Korea receive only a comparatively small share of their income through public cash benefits, especially when children are older

Note: Data refer to net household income for a single-earner two-parent family with two children, decomposed by income/expenditure source. One parent is assumed to work full-time and earn 50% of national average full-time earnings. The other parent is assumed to be inactive. Average full-time earnings/the average full-time wage (AW) refers to the average gross wage earnings paid to full-time, full-year workers, before deductions of any kind (e.g. withholding tax, income tax, private or social security contributions and union dues). Data for Korea account for the abolition of the supplementary child tax credit and the introduction of Korea's new child allowance using the parameters in place as of January 2019. The OECD average excludes Chile and Mexico. See Box 2.3, Box 2.4 and the OECD Tax and Benefit Systems website (http://www.oecd.org/social/benefits-and-wages/) for more detail on the methods and assumptions used and information on the policies modelled for each country.

Source: OECD estimates based on the OECD Tax-Benefit Models, http://www.oecd.org/social/benefits-and-wages.htm

Low-earning families with younger children receive slightly more than low-earning families with older children, thanks in part to the new child allowance. A single-earner family with two children aged 2 and 3 on 50% of the 2018 AW receives benefits worth just over 20% of the 2018 AW (Figure 2.17, Panel A). On top of child care tax credit and housing benefit payments, this family receives two child allowance payments worth 5.1% of the 2018 AW (KRW 2 400 000), and two sets of home care allowance (Chapter 4) payments worth the same. While valuable, this is still much less than the amounts receive by otherwise similar families in many other OECD countries. By way of comparison, a similar family in Finland, Ireland, Luxembourg, Poland or Slovenia receives family benefits, in-work benefits, and other social benefits (e.g. housing benefits, social assistance, etc.) worth in total around 30-40% of their respective 2018 AWs. In Canada and Denmark, the sum of these benefits comes to about 60% of the 2018 AW (Figure 2.17, Panel A).

This low-tax/low-benefit approach means that family net income depends more heavily on market earnings in Korea than in many other OECD countries (Figure 2.18). For example, in Denmark, a combination of relatively high tax rates and comparatively generous social benefits means that net family income responds only slowly to changes in gross market earnings (Figure 2.18, Panel B). In Korea, the relationship is much tighter (Figure 2.18, Panel A). Korea’s approach has its advantages. For example, it helps sustain work incentives and ensures that it pays to move into work or extend working hours; Korea has some of the lowest effective tax rates in the OECD for second earners entering work or moving from part-time to full-time work (OECD Tax-Benefit Data Portal). However, it also means that, more than in most other OECD countries, family net income levels vary strongly with changes in market earnings. To a greater extent than in much of the rest of the OECD, family living standards in Korea are vulnerable to events such as job loss and family break-up.

2.4.3. Moving towards a more comprehensive system of family cash support

Korea is in the process of developing its package of cash and tax supports for families. The introduction of the new child allowance was an important and positive step. While the new allowance’s payment rate is only moderate compared to some other OECD countries, it still provides much needed financial support for families with young children, especially low-income families. Other relatively recent measures, such as the earned-income tax credit and child care tax credit, are fairly modest and small in scale. In 2018, both were paid at only low levels, although the 2019 adjustments to the earnings threshold and payment ceiling on the earned-income tax credit, plus changes to the payment ceiling on the child care tax credit, go some way towards addressing this.

Korea continues to spend only relatively small amounts on cash and tax supports for families, which suggests there remains room to invest further in helping families with the costs of raising children. There is scope in particular for providing further support to families with older children. Any further support should, of course, be balanced against the need to maintain work incentives and ensure that work pays for parents, especially second-earner parents. However, the experience of other OECD countries suggests that, particularly when twinned with comprehensive leave, childcare and out-of-school-hours care provisions, it is possible to provide families with income support that does not produce strong financial disincentives to work.

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Figure 2.18. Family net income depends more strongly on market earnings in Korea than in some other OECD countries, such as Denmark
Net household income for a couple family with two children aged 2 and 3, by earnings level, by income/expenditure source, as a % of average full-time earnings (AW), Korea and Denmark, 2018
Figure 2.18. Family net income depends more strongly on market earnings in Korea than in some other OECD countries, such as Denmark

Note: Data refer to net household income for a couple family with two children (aged 2 and 3), decomposed by income/expenditure source. Data for Korea account for the abolition of the supplementary child tax credit and the introduction of Korea's new child allowance using the parameters in place as of January 2019. With the exception of the single-earner couple, both children are assumed to attend centre-based childcare full-time, defined as care for at least 40 hours per week. All parents are assumed to work full-time earning the mentioned percentage of national average full-time earnings, except for the single-earner couple, where only one parent works full-time earning 50% of average full-time earnings. Average full-time earnings/the average full-time wage (AW) refers to the average gross wage earnings paid to full-time, full-year workers, before deductions of any kind (e.g. withholding tax, income tax, private or social security contributions and union dues). See Box 2.3, Box 2.4 and the OECD Tax and Benefit Systems website (http://www.oecd.org/social/benefits-and-wages/) for more detail on the methods and assumptions used and information on the policies modelled for each country.

Source: OECD estimates based on the OECD Tax-Benefit Models, http://www.oecd.org/social/benefits-and-wages.htm

One option for Korea is to extend eligibility for the new child allowance to older children. As noted earlier, in most OECD countries, child allowances are often available up until children reach 16 or 18 years of age, but the 6-year-old age limit placed on the Korean allowance means that many dependent children do not qualify. Extending the eligible age range until adulthood, or at least up to the point where children leave compulsory education (age 14 in Korea), would help households with older children with the costs of raising a family. One consideration to keep in mind, however, is that this would involve transfers to families of all types, including those already on relatively high incomes, since the child allowance is currently not means tested.

Other options for consideration include further expanding the refundable earned-income and child care tax credits. These credits are means-tested and available only to families with relatively low market earnings, so expansion here would better ensure that assistance is directed towards those families that need it most – low-income families. From the perspective of supporting families with children, expanding the child care tax credit is likely to be most preferable, since payments made through this credit respond directly to the number of children in the family. Currently, the payment ceiling on the child care tax credit remains fairly low, even at its new 2019 rate of KRW 700 000 (1.5% of the 2018 AW) per child. By way of comparison, a similar if slightly more tightly-targeted refundable tax credit in the United Kingdom (the child tax credit) has a payment ceiling equal to 7.1% of the 2018 AW per child, albeit for the first two children only. Similarly, the United States’ refundable earned-income tax credit is effectively worth about 6.3% of the 2018 AW for the first child, although considerably less from the second child on. Further increasing the value of Korea’s child care tax credit to values closer to these levels would provide a much needed boost to low-income families, especially those with older children.

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Box 2.4. Modelling the tax-benefit position of families in Korea

It is necessary to use a number of assumptions and methodological choices for the analyses of the tax-benefit position of Korean families shown in Figure 2.16, Figure 2.17 and Figure 2.18. In addition to the detailed methodological information available on the OECD Benefits and Wages website (https://www.oecd.org/social/benefits-and-wages/), a couple of further notes are necessary:

  • The information on the tax-benefit position of families shown in Figure 2.16, Figure 2.17 and Figure 2.18 refers in general to the situation on 1 July 2018. However, for consistency with the earlier discussion, the new child allowance is modelled using the parameters in place as of 1 January 2019. This means that the allowance is paid at KRW 100 000 per child per month, with the eligible age range set at children aged 0-6. The means test on the child allowance previously in place in 2018 is not modelled.

  • The 2019 parameter adjustments to the earned-income tax credit and child care tax credit are not modelled. As a result, the numbers shown in figures in Figure 2.16, Figure 2.17 and Figure 2.18 likely underestimate the benefits received by (and the net income for) lower-income family types. However, especially in the case of the revision to child care tax credit, the effect is likely to be only fairly small. While most families with children on anything less than about 85% of the 2018 AW would receive some boost to net income through the increased child care tax credit, even at the new maximum amount (KRW 700 000 per child per year, KRW 200 000 higher than in 2018), the boost for a two-child family would be worth less than 1% of the 2018 AW.

References

[4] Ahn, B. and I. Im (2004), Change of Gender Roles and Family Institution, Gwachun, Gyunggi: Korea Inf. Strategy Dev. Inst.

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[8] ISSP (2019), International Social Survey Programme: Family and Changing Gender Roles IV - ISSP 2012, http://w.issp.org/menu-top/home/ (accessed on 24 June 2019).

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[11] Korea National Survey on Fertility, Family Health and Welfare (2015), Korea National Survey on Fertility, Family Health and Welfare, Korea Insitutute of Health and Social Affairs, https://www.kihasa.re.kr/web/publication/research/list.do?menuId=44&tid=71&bid=12&division=001&keyField=title&searchStat=2019&key=%EC%B6%9C%EC%82%B0%EB%A0%A5.

[14] Korea Welfare Panel Study (2016), Korea welfare panel study, Korea Institute of Health and Social Affairs, https://www.koweps.re.kr.

[10] Korean Longitudinal Survey of Women and Families (2016), Korean Longitudinal Survey of Women and Families, Korea Women’s Development Institute, http://klowf.kwdi.re.kr/content/report/annual_list.jsp.

[9] Korean Longitudinal Survey of Women and Families (each year), Korean Longitudinal Survey of Women and Familie, Korean Women’s Development Institute, http://klowf.kwdi.re.kr/content/report/annual_list.jsp.

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Notes

← 1. Average full-time earnings/the average full-time wage (AW) refers to the average gross wage earnings paid to full-time, full-year workers, before deductions of any kind (e.g. withholding tax, income tax, private or social security contributions and union dues). For more information, see OECD Taxing Wages (https://www.oecd.org/tax/taxing-wages-20725124.htm).

← 2. The abolished supplementary child tax credit was worth KRW 150 000 (USD 136) per child per year from the second child on and, where, applicable was added to the standard child tax credit. Because the supplementary credit was non-refundable, only those individuals with a positive tax liability could benefit. In practice, because the tax regime in Korea often reduces the tax liabilities of lower-earning families to zero, the abolished supplementary credit was effectively available only to higher-earning families.

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2. Families, family life and family policy in flux