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Critical Review on the Labor Inducement Effect of Korean EITC’s

  • 인문논총
  • 2019, 50(), pp.127-154
  • DOI : 10.33638/JHS.50.6
  • Publisher : Institute for Human studies, Kyungnam University
  • Research Area : Humanities > Other Humanities
  • Received : August 27, 2019
  • Accepted : October 7, 2019
  • Published : October 31, 2019

Bae Hwa Sook 1

1부산가톨릭대학교

Accredited

ABSTRACT

The purpose of this study is to critically examine goals and content of the EITC system, South Korea’s main form of work subsidy. By assessing the results of previous studies, it aims to analyse the impact of the system’s implementation. Additionally, this study presents improvements to the system to support the working poor and discusses issues to consider in the expansion of this social welfare policy. The first result of this study is that amongst policy objectives, the EITC’s effectiveness had a combination of both significantly positive and negative effects. This is a result of the divergence between the institution’s pursued goals and expectations regarding the impact of the targeted work incentive. Second, the EITC’s two objectives, income support and work incentives, are inconsistent with institutional operations and with policy objectives as they do not address the fundamental issues of working poverty. Finally, policy produced unintended consequences of reducing labor hours and weakening the employer’s social responsibility to pay adequate wages. Thus, this study concludes that supporting the working poor and incentivizing their labor does not depend on reforming EITC policy, but rather on reforming policies regarding, among others, unemployment income support, job training, job turnover support, and minimum wage; the function and role of EITC systems should be adjusted alongside the expansion of complementary policies.

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