The Korea Local Administration Review

This study examined the effect of the ‘Hometown Love Donation’ system on expanding local finances and reducing financial gap between local governments in Korea by analyzing 526,305 actual donation records from 2023. First of all, considering various fiscal changes, the implementation of this system generated 36.8775 billion won or 40.236.08 billion won in fiscal income across 243 local governments. In addition, after dividing the local governments into non-metropolitan and metropolitan areas, depopulated and non-depopulated areas, and regions with low and high ratio of self-reliance, it was found that the amount of revenue generated by the implementation of the system was higher in regions that were relatively more financially disadvantaged. Specifically, the amount of fiscal revenue generated was more than ten times greater in non-metropolitan areas compared to the metropolitan areas, over 1.3 times greater in areas with depopulated areas than non-depopulated areas, and more than four times greater in the bottom 20% of local governments in terms of fiscal self-reliance compared to the top 20% of local governments. Furthermore, an analysis of the effects of the system on reducing the fiscal gap between local governments, conducted by dividing the local governments into administrative district units, revealed the following results. When analyzed based on the total amount of donations, the fiscal gap between local governments was somewhat alleviated in all district units, and when analyzed based on the amount per capita, the fiscal gap between local governments was alleviated only in the counties and autonomous districts. Therefore, if the ‘Hometown Love Donation’ system becomes more activated in the future, it is expected that the system will have a greater impact in expanding local finances and reducing the fiscal gap between local governments in Korea.