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Seoul Journal of Economics - Vol. 35 , No. 2

[ Article ]
Seoul Journal of Economics - Vol. 34, No. 2, pp. 237-264
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 30 May 2021
Received 16 May 2020 Accepted 30 Aug 2020

Population Aging in Korea: Implications for Fiscal Sustainability
Sungjin Cho ; Jan R. Kim
Sungjin Cho, Professor, Department of Economics, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 08826, Korea, Tel: 82-02-880-6371 (
Jan R. Kim, Corresponding Author, Professor, Department of International Economics and Law, Hankuk University of Foreign Studies, 107 Imun-ro, Dongdaemun-gu, Seoul 02450, Korea, Tel: +82-2-2173-3225 (

Funding Information ▼

JEL Classification: E62, H60, J11


Adverse demographics in Korea impinges on its growth potential and fiscal outlook. Accordingly, this study examines the current demographic situation and recent projections related to the impacts of population aging in Korea, particularly on the looming fiscal imbalance. The focal conclusion is that a two-way effect exists from population aging. First is the anticipated stress placed on government finances due to increasing welfare expenditure for the elderly. Second is sluggish economic growth and thus the inability to collect sufficient government revenues. The prospect of large and growing deficits is therefore immediate and potentially long lasting as governments will be faced with rising spending demands and sluggish tax revenues arising simultaneously from an aging population.

Keywords: Population aging, Public spending, Tax revenues, Fiscal imbalance


Financial support from the Center for Distributive Justice in the Institute of Economic Research of Seoul National University is gratefully acknowledged, and the corresponding author acknowledges research grant for 2019- 2020 from Hankuk University of Foreign Studies.

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