After more than a decade of widening income gap, a debate is raging in the Korean society about the directions of the country’s social policy: should the state extend the social safety net to the hitherto self-sufficient middle class? There is a growing support in the political class in favor of extending basic social services beyond the low income households, but little is understood with respect to possible poslicy repercussions of such actions. Those in favor of the welfare expansion argue that only the state can solve the downward trend in the population growth and the entrenched unemployment problem among young adults. Policy experts argue that simply increasing social spending usually leads to waste and distortions in the economy.