The Fiscal Burden of Korean Reunification: A Generational Accounting Approach

43 Pages Posted: 9 Sep 2004 Last revised: 21 Sep 2010

See all articles by Alan J. Auerbach

Alan J. Auerbach

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Young-Jun Chun

Incheon National University - Department of Economics

Ilho Yoo

KDI School of Public Policy and Management

Date Written: August 2004

Abstract

This paper uses Generational Accounting to assess the fiscal impacts of Korean reunification. Our findings suggest that early reunification will result in a large increase in the fiscal burden for most current and future generations of South Koreans. The Korean reunification's fiscal impact appears much larger than that of German reunification, due to a wider gap in productivity between the two Koreas and North Korea's much larger share of the unified country's population. The projected large-scale fiscal burden on South Korea is attributable primarily to the rapid increase in social welfare expenditure for North Korean residents, rather than to the direct reconstruction cost of the North Korean economic system after the disintegration of its old economic regime.

Suggested Citation

Auerbach, Alan Jeffrey and Chun, Young-Jun and Yoo, Ilho, The Fiscal Burden of Korean Reunification: A Generational Accounting Approach (August 2004). NBER Working Paper No. w10693. Available at SSRN: https://ssrn.com/abstract=579224

Alan Jeffrey Auerbach (Contact Author)

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-643-0711 (Phone)
510-643-0413 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

Young-Jun Chun

Incheon National University - Department of Economics ( email )

(402-749) 177 Dowha-Dong,nam-gu
Incheon
Korea

Ilho Yoo

KDI School of Public Policy and Management ( email )

P.O. Box 184
Seoul, 130-868
Korea, Republic of (South Korea)

Register to save articles to
your library

Register

Paper statistics

Downloads
37
Abstract Views
956
PlumX Metrics