Korean Journal of Policy Studies
Graduate School of Public Administration, Seoul National University
Article
Employment-Friendly Welfare Policy and Information Asymmetry: Evidence from Sweden and Korea*
Illoong Kwon1, Jinho Lee2
1Illoong Kwon, first author, is an associate professor in the Graduate School of Public Administration, Seoul National University, Korea. E-mail:
ilkwon@snu.ac.kr.
2Jinho Lee, corresponding author, is an MA student in the Graduate School of Public Administration, Seoul National University, Korea. E-mail:
jinholee1125@gmail.com.
© Copyright 2016 Graduate School of Public Administration, Seoul National University. This is an Open-Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/4.0/) which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited.
Received: Feb 15, 2016; Revised: Mar 05, 2016; Revised: Mar 23, 2016; Accepted: Mar 24, 2016
Published Online: Aug 31, 2016
Abstract
This paper provides a simple theoretical framework for analyzing how welfare polices can affect the incentive to work and compares the recent welfare policy reforms of Sweden and Korea. Sweden has systematically reformed its welfare policies in response to slowing population and economic growth and an aging population. This paper shows that recent Swedish reforms of tax policies and unemployment benefits bear out theoretical predictions that such reforms will help reduce moral hazard and adverse selection problems. In comparison, recent Korean reforms of tax policies and unemployment benefits have focused on moral hazard problems but have largely ignored adverse selection problems.
Keywords: Employment-friendly welfare policy; Information asymmetry; Sweden
