In Korea during past 25 years demand for administration is increased. But most of public needs are satisfied by central government. By 1987 local self-government shall be executed and it is suggested that local finance should be improved.
To be successful local self government must sustain stable revenue sources. Many studies about local finance and local government are focused on local self-reliance ratio and local revenue. But even though local expenditure is small its expenditure should be practiced reasonably. This paper focuses on local expenditures.
In estimating expenditure equation of Korean local government we use city and county as unit of analysis estimated expenditures are administration, welfare, industry, utility, defense, other and sum of these six expenditures.
There are many studies about the local finance of Korea. These studies are concentrated on the revenue side because the size and revenue structure have many problems which are the serious barriers to the operation of self government.
We reviewed several studies which tried to construct and estimate the demand equation of local services. The demand models of public goods have more problems than those of market goods because the prices of former cannot be identified. Additionaly, the public goods are different from market goods having the characteristics of joint consumption and non-rivalrity etc..
The demand models of public services assumed that the preference of people is well revealed by local self government and local election. If these don't exist or the preference is not reflected upon local expenditure, the demand models have serious defects. Though the preference is well reflected in developed countries, the lack of this condition make it hard to apply such demand equation to our country.
However, even in a more developed countries, one cannot say that the preference of public goods is revealed as the same as that of private goods. Thus the problem of preference revelation is that of magnitude, not presence and every demand model of public goods has some defects in this respect. We assumed the preference of people is more or less reflected in our country though self local government and local election are not executed.
Each study employs own price variable. There are many problems and discussion regarding to the price of local services. Borcherding and Deacon assumed that the wage rate difference reflects the price while Bergstrom and Goodman thought that local property is the only input which make the production costs different.
The concept of price can exist as long as the production costs differ between municipalities. Production cost are influenced by not only property but wage. Thus we imagined that the per capita local tax can best reflect the difference of production cost.
The empirical analysis supports that the relation between income and expenditure is not U-shaped. We can infer from this to mean that it is reflected that tax burden of lower income class is not light.
The estimates of income elasticities remained from 0.0 to 0.6 except utility expenditure. This is not different from those reported in other empirical studies. The estimated price elasticities are not statistically significant but they remained stably from -0.5 to -1.2 indicating that per capita tax is relevant to the price proxy variable.
한국의 지방재정은 사회, 정치, 경제, 문화의 변동으로 인하여 새로운 국면을 맞이하고 있다. 즉 단순히 중앙재정의 예속자로서가 아니라 주민의 의사에 따라 충실히 운영되어야 할 과제를 안고 있는 것이다.
특히 1987년부터 지방자치제가 실시되면, 주민의 이익이 관련되어 있으므로 지출에 대한 관심이 높아질 것이다. 그런데 현재까지의 지방재정에 관한 많은 연구의 특징은 지방재정의 세입을 기술적으로 분석하고 있는데 그치고 있다. 물론 이것은 건전한 지방자치를 위한 세입이 확보되어 있지 못한 데 기인하나, 작은 규모나마 합리적인 예산의 집행도 결코 무시할 수 없다.
본 연구는 지출에 초점을 두었는데, 지방재정지출의 분석을 위하여 기존 이론들을 고찰하고 한국실정에 맞게 변형하였다. 즉 많이 이용되는 Borcherding-Deacon 모델과 Bergstom-Goodman 모델은 지방 공공 서비스의 생산에 있어서 여러 생산요소중 하나의 생산요소의 가격만이 생산비용을 좌우한다고 보았다. 그러나 본 연구에서는 생산비용을 결정하는 생산요소는 하나만이 아니며 일인당 지방세 부담액에 여러 생산요소의 가격차가 잘 반영된다고 가정하였다.
추정결과 가격탄력성은 민들만한 범위에 머물렀다. 이것은 기타 연구들의 추정치가 가격탄력성으로 보기 어려운 점에 있던 것과는 좋은 대조를 보이고 있다. 또 소득에 대해서는 비탄력적이라고 추정되었는데 이것은 지방 공공 서비스가 필수재이며, 생활 기본수준의 충족에 목표를 두고 있는데 기인하는 것으로 보여진다. 앞으로 소득이 증가하게 되면 지방 공공 서비스에 대한 수요가 증가하리라 예상되는데 이에 대한 대책이 요망된다. 그리고 인구탄력성의 계수는 음이었는데 이것은 인구증가로 인한 비용 분담으로 결과라고 여겨진다.
다만 본 연구는 정치, 사회적 요소를 충분히 고려하지 못하고 있고, 또 자료획득의 곤란으로 대리변수를 사용하였는데 앞으로 이런 점이 개선되어야 하겠다.
