Government rolls out Livelihood Recovery Consumption Coupons (LRCC) to stimulate domestic consumption by supporting small businesses and boost the local economy. The government is distributing LRCC in a phased manner, with amounts differentiated by not only income level but also by region and vulnurability, providing each citizen with between 150,000 and 550,000 KRW. The first round of coupons distribution, which began on July 21 and will continue until Sept. 12, provides every citizen with 150,000 to 400,000 KRW. The second round, scheduled from Sept. 22 to Oct. 31, will offer an additional 100,000 KRW to 90% of the population.

  The usage of these consumption coupons is restricted to local small business merchants affiliated with Local Business Voucher whose annual sales do not exceed 3 billion KRW. This measure aims to revitalize local economies centered around small business owners. To explore whether the LRCC can revitalize the sluggish Korean economy, interviews were conducted with Professor Shin Kot-bee from the Dept. of Economics and Professor Jeon Sang-min from the Dept. of Consumer Science in CBNU.

  The main difference between the COVID-19 Disaster Relief Fund (DRF) and the LRCC lies in the restrictions on usage and the method of distribution. The LRCC focus on supporting local economies and small businesses. Both policies aim to alleviate downward pressure on the economy, but the LRCC are designed to achieve both consumer recovery and the activation of regional economies.

  It is difficult to determine the exact impact since the policy is still ongoing. However, based on previous COVID-19 DRF, the Marginal Propensity to Consume (MPC) was around 0.3 to 0.4, meaning that most of the effect was in replacing existing consumption. The LRCC may have a short-term effect on boosting consumption, but their long-term impact on economic recovery is expected to be limited. That said, according to data released by the Ministry of the Interior and Safety on Aug. 7, sales increased compared to the same period last year, and especially, the consumption of high-end goods like clothing, accessories, and eyewear rose. This can be seen as the combined result of the expansion of consumer coupons, regional currency use, and discount benefits. Cash support policies tend to be spent on essential goods like food, but the coupons focus on stimulating additional consumption. However, since the effect is short-term, a long-term policy discussion and an evaluation of effectiveness after the second distribution are necessary.

  Now is seen as a time for active government intervention. Even a short-term increase in consumption plays a crucial role in sustaining small businesses and self-employed individuals. Fiscal soundness is not just about expenditures; it refers to the balance between revenue and spending. Along with the restoration of corporate tax and property tax reductions, investments in activating the local economy are needed. A decline in the number of self-employed individuals could result in a reduction in business income tax and affect the economy as a whole in the long run. Therefore, the current policy is viewed as within a range that does not significantly undermine fiscal soundness.

  Derivative policies such as contests can increase public participation and serve as a solution to issues such as the digital divide that has excluded many information-vulnerable groups. They also provide an educational benefit by showing how taxes are being used, which can enhance the sense of efficacy and trust in tax payments. Additionally, such initiatives can improve accessibility and ease of use for people vulnerable to information access.

  From a different perspective, support for small businesses and self-employed individuals is necessary. From an efficiency perspective, simply supporting non-competitive businesses may not always be the best approach, so it is important to help small businesses and the self-employed become more competitive. This requires consulting programs, regular management performance evaluations, and data-driven policy design. When policy effects and promotion are backed by data, policy implementation becomes more credible. With this kind of structural support in place, consumer coupons can function as a sustainable link in the recovery of regional economies beyond short-term assistance.

  The LRCC policy goes beyond simple economic stimulus or consumption inducement. It directly and practically helps recover the sales of small businesses and self-employed individuals in local communities. Additionally, they offer reassurance and a sense of leisure in daily life by allowing consumers to feel that it is okay to spend. This psychological effect is what sets them apart from previous policies.

  Even if the amount is small, consumer coupons stimulate consumption behavior immediately by offering a combination of factors such as encouraging non-essential spending, easing purchase resistance, creating a sense of time pressure due to expiration dates, and providing social experiences. The core value of this policy is to provide a ʻsmall but certain consumption motivation.’

  In a situation where consumption is shrinking due to high inflation, interest rate burdens, and economic uncertainty, the government providing a social signal that it is now okay to spend, along with immediate incentives, has a strong effect on stimulating consumer sentiment. In particular, they stimulate delayed or deferred spending in sectors closely related to daily life, such as dining out, healthcare, clothing, and culture. Although the amount may not be large, it carries the precise goal of restoring small joys in life and revitalizing the stagnant local economy. For true livelihood recovery, a comprehensive approach is needed, including strengthening income foundations, stabilizing employment, and expanding social safety nets. Through this, the LRCC can serve not just as a simple support measure, but as a powerful link and starting point for economic recovery.

  Choi Yun-seo (21, Sangyeok-dong, Daegu) said, “I used the LRCC at nearby restaurants, convenience stores, Daiso, and Olive Young, where I frequently visit. Even though I often shop in the relatively inexpensive college district, the rising prices had been a burden. With the consumer coupons, I was able to purchase things I had hesitated to buy before without any financial stress. The LRCC have been very helpful to me.”

  Lee Joo-young (42, Gagyeong-dong, Cheongju) said, “I used LRCC for my children’s education expenses. Although they were not a large amount, it did alleviate some of the financial burden. However, it is a bit disappointing that the usage is limited to certain places, narrowing my options for spending.”

  In the current situation in which global economic uncertainty is rising and the domestic economy is entering a downturn, the LRCC are a policy aimed at increasing sales for local small businesses by setting limited usage locations and time periods. Unlike simple cash support, the LRCC are designed to focus on local neighborhood markets and daily life-related sectors, ensuring that consumption leads to actual regional economic recovery.

  In this context, it is crucial for the citizens who receive the LRCC to carefully check the expiration date and usage locations, ensuring they are used within the given timeframe. Additionally, individuals must recognize that personal consumption has a positive impact on local small businesses and the broader economy, and practice responsible consumption without exploiting the system.

  Meanwhile, the government needs to strengthen continuous monitoring and on-site support to enhance the effectiveness of the LRCC policy and consider the convenience of users. Furthermore, structural support measures to enhance the competitiveness of small businesses and self-employed individuals, along with comprehensive measures for regional economies, should be implemented together to solidify the foundation for economic recovery.