[Jeondaegyu's 7 Jeon 8 Gi] Marriage, Childbirth, and Bankruptcy

Jeon Daegyu, Chief Judge of Seoul Bankruptcy Court

In the “2020 Comprehensive Youth Survey” announced last month by the Ministry of Gender Equality and Family, only 39.1% agreed that “marriage is a must,” a sharp decline of 11.9 percentage points compared to the 2017 survey (51%). On the other hand, the opinion that “even if married, it is not necessary to have children” also surged by 14.2% over three years to 60.3%. It is presumed that the brutal employment crisis, soaring real estate prices, and widening gender perception gaps contribute to negative views on marriage and childbirth. This brief but telling data clearly reflects the thoughts of young people regarding marriage and childbirth.

Elizabeth Warren, an expert in U.S. bankruptcy law, and her daughter Amelia Warren Tyagi published “The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke” in 2003. The authors pointed out that at that time, dual-income middle-class families in the U.S. earned much more than the single-income middle-class families of the 1970s, but their financial stability was much lower, with many families facing bankruptcy or on the brink of it. The Warren women’s analysis is as follows: one commonality among bankrupt families is that both spouses work. Generally, it is assumed that families where both spouses earn money live more stable lives than those with only one income, because the income is higher.

However, the research results showed the exact opposite. Stay-at-home parents acted as a safety net when the family faced a crisis. The situation changed with dual incomes. When the mother started working, income increased, and consumption levels rose accordingly. But when sudden situations arose, finances deteriorated rapidly. When only the father earned money, if he was laid off, the mother could work until the father found another job. But with dual incomes, if the father was laid off, there was no way to replace his previous income. In case of divorce, if the mother was a stay-at-home parent, she could get a job and earn new income to support the children. But with dual incomes, the situation could not improve. If one spouse in a dual-income couple suddenly falls ill, one income instantly disappears. So where did the money earned by middle-class dual-income couples go? It was spent on housing prices, education costs, and medical expenses.

The second commonality among bankrupt families is that they are parents with children. According to the research, married couples with children are more than twice as likely to file for bankruptcy than married couples without children. Divorced women raising children are nearly three times more likely to file for bankruptcy than single women without children.

Although this analysis is of American society 20 years ago, many points surprisingly coincide with today’s reality in Korea. According to the “2021 Ordinary People’s Financial Life Report” published recently by Shinhan Bank, households in their 40s and 50s with middle or high school or college children spend more than a quarter of their total monthly consumption on education costs. Next are food and housing expenses. Due to the surge in real estate prices, the burden of housing costs is increasing, and with the extension of average life expectancy, medical expenses are expected to rise sharply. While it cannot be definitively stated that marriage and childbirth are direct causes of young people’s bankruptcies, it cannot be denied either. Observing the recent surge in real estate prices, severe employment difficulties, and the cryptocurrency frenzy, there is concern that the phenomena seen in American society 20 years ago are now occurring in the Republic of Korea.

Jeon Dae-gyu, Chief Judge, Seoul Rehabilitation Court

This content was produced with the assistance of AI translation services.