The Paradoxical Influence of Economic Growth on South Korea’s Birth Rate Dilemma Open Access

Abstract

Since the 1960s, while South Korea’s birth rate has rapidly decreased, economic development has increased. Among OECD countries, South Korea has the lowest birth rate, and South Korea is expecting scarce labor in its labor market. It can be easily predicted that a low birth rate will hinder potential economic prosperity. However, we can’t easily predict the influence of economic development on the birth rate. Despite continuous economic growth and childcare policy, the birth rate in South Korea is decreasing. Economic prosperity results in a better economic environment for citizens in South Korea. The economic development of South Korea led to increase in life quality. However, the decline in the birth rate shows that economic development negatively impacts the birth rate. An increase in quality-of-life improved citizens’ life and provided better living condition. The inverse relationship between economic development and birth rate seems to be indescribable. This irony can explain by Household Production Theory. This theory implies the production made by households is directly consumed by them, not by other consumers. Since caring for children is a household production and as the cost to maintain this production is rising, people refuse to have a child regardless of economic growth. Through this research, I will describe how household production theory resulted in a low birth rate by analyzing the relationship between economic variables and birth rate. Various data, graphs, and statistical tests will be used to explain this common birth rate phenomenon in South Korea.

Table of Contents

I. Introduction

II. Methods

III. Graphical Analysis

a. Time series graph of OECD countries

b. Geographical Heatmap of South Korea

i. Number of households

ii. Birth Rate

iii. Unemployment rate

iv. Employment rate

v.  Income

vi. Household Expenditure

vii. Educational Expenditure

viii. House price

c. Time series graph of South Korea

i. Birth Rate

ii. GDP per capita

iii. Income

iv. Educational Expenditure

v. Household Consumption

vi. Housing price index

vii. Income vs Household Consumption

viii. Income vs House Price

ix. CPI

x. Unemployment rate and Employment rate

xi. Labor force participation rate

xii. Women quitting job for childcare

xiii. Average age of becoming a mother

xiv. Childcare support & policy (cooperation vs government)

IV. Statistical Analysis

a. General OLS model

b. Fixed Effect Model

c. Statistical Assumption

V. Conclusion

VI. Future Reference

VII. References

About this Honors Thesis

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School	Emory College
Department	Quantitative Science
Degree	B.S.
Submission	Honors Thesis
Language	English
Research Field	Economics, General Economics, Labor Engineering, System Science
Keyword	Birth Rate Fixed Effect Model
Committee Chair / Thesis Advisor	Zhiyun Gong, Emory University Sam Cherribi, Emory University
Committee Members	Christine Ristaino, Emory University

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