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KMID : 1001320130400010121
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Social Welfare Policy
2013 Volume.40 No. 1 p.121 ~ p.148
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The Influence of Local Fiscal Equaliation Scheme on Local Governments’ Social Welfare Expenditure
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Jang Dong-Ho
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Abstract
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The aim of this study was to explore the influence of local fiscal equalization scheme scheme on the levels and disparities in social welfare expenditure of the Korean local governments For empirical analysis, Financial Yearbooks of Local Government and Social Welfare Expenditure Database were employed in this study and 228 individual local governments were analyzed. The dependent variable of the analysis was social welfare expenditure per capita, and the independent variables were autonomous financial resources of local government per capita, local tax share per capita, metropolitan city revenue sharing per capita or province revenue sharing per capita, and subsidies per capita, Conducing descriptive analysis, multiple regressions and Gini decomposition analysis of inequality, the major findings were as follows, First, any fiscal transfer provided from local fiscal equalization scheme is helpful for the preservation of local government finance in general: however, the local tax share and subsidies play significantly difference roles: the former increase social welfare expenditure per capita only in cities and counties. but not in autonomous self districts, while the latter do exactly the opposite Second, local fiscal equalization scheme in Korea does not reduce disparities of social welfare expenditure between local governments in general; they even greater inequalities in social welfare expenditure across local governments, Based on these findings this study argues that the Korean local fiscal equalization scheme must be reformed in order to strengthen the fiscal sustainability of local social welfare expenditure and to reduce the disparities of social welfare expenditure.
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KEYWORD
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Local fiscal equalization scheme fiscal transfers, Local governments, social welfare expenditure, Gini coefficient
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