Policy standards for managing the risk factors related to the Korean welfare state: Methods and applications in measuring the adequacy and efficiency of government social expenditures

Abstract

The purpose of this three-year study is to develop a set of policy standards for diagnosing and monitoring the adequacy and efficiency of government social expenditure. In this second-year of the study, we first reviewed fiscal frameworks in the Netherlands and Sweden as best practices. We also reviewed the method of diagnosing appropriateness of government social expenditures. A range of required government social expenditures was estimated based on household’s financial demand by applying the Reference Budget technique. The level of household’s financial demand for government transfer was measured in the following criteria. The absolute and relative poverty lines, the standard median income, the average consumption of households for daily life, and the willingness to pay for public assistance. Finally, we examined the performance of government social expenditures at a collective level, measuring the effects of income redistribution and economic stabilization.