Changes in Demographic, Social, and Economic Structure in North Korea and Policy Direction for Improving Residential Environment

ABSTRACT

This paper analyses structural changes in demographic, social, and economic conditions in North Korea and draws policy implications on housing supply and residential environment. Demographic and social structures in North Korea, such as population aging, low fertility rate, and increases in nuclear families, are changing, just as many developed countries have experienced. At the same time, there is a high demand for house and infrastructure redevelopment. Meanwhile, there are significant differences in household wealth, living infrastructure, and family compositions across North Korean provinces. Hence, policymakers in North Korea must take into account such regional heterogeneities when they consider the house supply and residential improvement policies.

KEYWORDS:

• North Korea
• house supply
• residential environment
• demographic structure
• redevelopment

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 It is illegal for a household to own multiple houses in North Korea. It is known, however, that some capitalists own several houses (with multiple permits to stay in the houses) by using other people’s names. They also face the risk of losing permits.

2 According to Hong (2014) and Choi et al. (2015), the average rental fee is around three percent of living expenses. According to testimony from a North Korean defector, costs for using electricity, water, and gas are around 1000 North Korean won, which are very small amounts considering the exchange rate of 8000–8500 won per US dollar.

3 According to North Korean criminal law, people who transact in goods or services can serve up to three years in prison.

4 Note that according to the North Korean Housing Act, the central government must supply housing; however, the government has since given up on supplying housing to citizens.

5 Chang et al. (2016) report that the housing market became invigorated after 2005. Surveyed North Korean defectors and 40.4% of respondents purchased homes between 2006 and 2010. Moreover, it is estimated that more than 10 years are required to receive a government-assigned house.

6 The total dependency ratio is defined as the sum of both the youth (0–14 years of age) and elderly (65 years and older) populations divided by the working age population (15–64 years of age) (Unit: per 100 of working age population).

7 The youth dependency ratio is defined by the ratio of the youth population (14 years and younger) per 100 working age population (16–64).

8 The old-age dependency ratio is defined by the ratio of the elderly population (65 years and older) per 100 working age population (16–64).

9 The ageing index is defined by the ratio of the elderly population (65 years and older) per 100 youth population (14 years and younger).

10 When migration becomes less limited in North Korea in the future, the province-level population growth rate might be affected. The analysis in this section is based on the assumption that inter-provincial migration is restricted, and each province has equal quality of health and residential environment.

11 Household asset by province is elaborated in Section 4.4.

12 The proportion of the female population in this age group is 49.5%.

13 When we include Pyongyang in our sample, the correlation between household wealth and the ratio of nuclear families becomes positive.

14 Although the migration rate in Pyongyang is relatively high in North Korea, its value is still lower than that of other countries. The appendix presents the migration rates for South Korea, US, and Vietnam.

15 According to testimony from a North Korean defector, the price of low-quality detached housing in Pyongyang is around $3000–$4000; houses for middle-class families are around $50K; luxurious apartments are around $250K.

16 Hwang et al. (2010) reported that financial intermediaries do not account for potential business profitability, marketability, or technology when they lend funds to firms. They simply follow the guidelines decided by the central government.

17 According to testimony from a North Korean defector, a person’s credit level can be determined by his/her social and job position. If a high-ranked officer cannot successfully repay debts, significant stigma costs ensue. Hence, (s)he is highly likely to repay debts and thus has a good (implicit) credit record.

18 According to Choi et al. (2018), 771,500 houses were supplied from 1953 to 1960, 1,686,000 houses were supplied from 1961 to 1977, and 1,040,000–1,390,000 houses were supplied from 1978 to 1993.

19 Following the definition in the 2017 MICS, eco-friendly cooking energy includes electric stoves, LPG, cooking gas stoves, and biogas. The 2008 Census has fewer survey questions than the 2017 MICS. Thus, this section categorizes eco-friendly energy if households use electricity and gas as their main source for cooking.

20 This subsection is written based on Joung (2016) and the North Korean defector interview.

Additional information

Funding

This work was supported by the Yonkyeong Foundation (sponsored by Metanet and A.T. Kearney Korea).