Child and elderly care in South Korea: policy analysis with a gendered, care-focused computable general equilibrium model

Abstract

The Republic of Korea is characterized by rapid growth of its elderly population, a stagnant working-age population, the world’s lowest total fertility rate, and the largest gender wage gap among the OECD countries. The heavy domestic and care work performed by women who receive little or no help from male household members constrains their labor force participation. The government strives to reduce the growing care burden of households, particularly among women, and raise female labor force participation rates as well as fertility rates. We examine the impact of various policy options to attain these objectives using a gendered computable general equilibrium (CGE) model for Korea. It is the first model in the literature using time use data with a focus on care services provided by the market and households. The simulations focus on the impact of policies that expand public care, provide subsidies to care provided by households or the private sector and reduce female wage discrimination. The results indicate that these policies improve the welfare of households with care responsibilities by freeing up time for women to take on jobs that pay better. Their broader economic impact, however, depends on the flexibility of gender roles in the division of labor both in households and in the broader economy. 

JEL classification: J13, J14, J16, E16, C68