Analysis of Changes in Financial Expense Structures of Local Government Following the Increase in the Expenses of Social Welfare Cost

Abstract

The purpose of this structure is to substantially analyze the structural changes to the financial expenses of each local government following the increase in the expenses of social welfare cost. Constant increase in the welfare funds since the foundation of local government system has worsened the local finances and led to a decrease in the funds for other policies according to the law of Zero-sum game. This study built the panel data of basic local governments of cities, towns, and self-governed districts that actually provide local welfare services and analyzed the change in financial expenses following the increase in the welfare cost in each area of policies. Considering the results of analysis, there is a difference in level, but the ratio of expenses decreased in all areas of social infrastructure related to the development of major local economy in all cities, towns, and self-governed districts. This can have a negative impact on the local economic activities from a long-term perspective and would require an active exploration of alternative plans to resolve the welfare finance problems of local governments in the future. the foundation of local government system has worsened the local finances and led to a decrease in the funds for other policies according to the law of Zero-sum game. This study built the panel data of basic local governments of cities, towns, and self-governed districts that actually provide local welfare services and analyzed the change in financial expenses following the increase in the welfare cost in each area of policies. Considering the results of analysis, there is a difference in level, but the ratio of expenses decreased in all areas of social infrastructure related to the development of major local economy in all cities, towns, and self-governed districts. This can have a negative impact on the local economic activities from a long-term perspective and would require an active exploration of alternative plans to resolve the welfare finance problems of local governments in the future.