PurposeIn response to the pandemic, the Korean government introduced fiscal measures: including the Emergency Disaster Relief Funds which is the first-ever universal benefit in Korea. This paper identifies the effects of the measures on poverty, household income and household consumption expenditure under the disproportionate effect of the pandemic.Design/methodology/approachThis study analysed the Korea Household Income and Expenditure Survey (KHIES) with Changes-in-Changes at five percentiles (5, 25, 50, 75 and 95%) instead of Difference-in-Differences (DD) because the parallel trends assumption of DD cannot be investigated due to the recent KHIES redesign. In addition, it also exmined the effects on vulnerable groups (e.g. female, elderly and young households).FindingsCOVID-19 has had prompt and disproportionate effects on the vulnerable, such as low-income, female and elderly households. However, the government measures had a limited effect. First, the measures could not mitigate the initial income reduction and only had temporary positive effects on income and consumption expenditure. Second, young households tended to save the relief instead of present consumption. Lastly, education disparity was observed at 25 and 50%. Therefore, this study suggests that response measures need to be sustainable and concentrated on the vulnerable.Originality/valueA large literature estimated effects on either household income or household consumption expenditure, and focused on macroeconomic indices (e.g. marginal propensity to consumption). This study analysed both income (poverty) and consumption expenditure and found policy implications for better welfare system in an economic downturn.
Prior studies have typically concentrated on poverty status to determine anti‐poverty measures; however, this approach cannot sufficiently detect income heterogeneity. This study employs quantile regression for panel data to investigate the Korean Labour and Income Panel Study 2003–2020. Moreover, it adopts both household‐ and community‐level variables and separates demographic groups as working‐age and older adults, considering Korea's severe old‐age poverty. The findings indicate that household‐level characteristics, such as householder's gender, physical health, and employment status, present heterogeneous effects across the income distribution. Second, low‐income households are more vulnerable to regional economic and labour market downturns than high‐income neighbours. Lastly, although the National Pension, a backbone of the public pension system, provides limited supports for retirees because it was introduced much later than other countries, it assists low‐income old adults more effectively. Therefore, this study suggests more tailored redistribution measures, considering heterogeneous effects of household‐ and community‐level environments, and a further expansion of the National Pension to mitigate old‐age poverty.
The Korean government initiated a multi‐tiered benefits system for older people, but the relative poverty rate of the older population remains the highest among developed economies. This paper employed the Shapley decomposition and four efficiency criteria to evaluate the anti‐poverty efficacy and efficiency of major public transfer benefits with the Korea Welfare Panel Study 2006–2018. The results present that the Korean public pension exerted the greatest efficacy among the programmes. The efficacy of the Basic Pension, operating as a means‐tested benefit, significantly increased when implemented in 2008 and expanded in 2014. In terms of efficiency, the contributory public pension supported only 40% of older adults in poverty. However, the generous coverage of the Basic Pension since 2008 might have led to more than half of recipients not experiencing absolute poverty. Therefore, this paper concludes with suggestions for more financial support targeting the economically vulnerable.
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