This paper presents public expenditure for children from birth to preschool age and their parents, estimates additional expenditure if financial support is extended, and introduces policy issues that extension can incur. The amount of public expenditure provided by central government, local governments, grants for local education, and national health insurance accounts of 7,705.5 billion won in 2012, is approximately annually 2.78 million won per child of the 0~5 year olds. If the public benefits for postnatal care, vaccinations, and childcare, preschool, and home-care cash benefits are extended, supplementary expenditures could rise to 2,341.6 billion won to 4,022.7 billion won in 2012 according to scenarios. As a result, total expenditure is expected to rise to 10,047.0 billion won to 11,728.2 billion won in 2012. Public expenditure for childcare and preschool in 2012 is 6,445.6 billion won (0.48% of GDP). If the beneficiaries and the amount of benefit per child grow, the expenditure is expected to grow from 7,846.5 billion won (0.59% of GDP) to 8,729.6 billion won (0.66% of GDP), reaching roughly the OECD average (0.6% of GDP).
    The extension of public expenditure is expected to reduce the economic burden on the parents of young children. On the other hand, it might increase the financial burden on central government and local governments, reduce women’s economic participation, lead to a short supply of child care facilities and preschool caused by rapid increase of demand on those, and decrease the effects of income redistribution as the criterion of family income disappears. The paper suggests political measures to alleviate these potential problems.

Cho Eunyoung