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Following the Asian Financial Crisis of 1997, Korea has suffered what many consider to be a severe poverty problem. Despite policy efforts to reduce poverty and economic recovery in the early 2000s, poverty affects many households and certain households are at risk of staying in poverty once they are in it. Using longitudinal panel data from 2005 to 2014, this study defines three indicators of poverty based on asset holdings, rather than income. It then examines the dynamics of asset poverty in Korea across the study period. The study's primary goal is to reveal differences across the three indicators and identify which groups of poor people in Korea have been structurally trapped in poverty. We applied a dynamic panel model of discrete choice to the Korean Welfare Panel Study (KOWEPS) from the 1 st to 10 th waves and show that, despite the indicator, the asset poor who experienced asset poverty in the previous surveyed year or at wave 1 are likely to fall into structural and persistent poverty over time. In addition, the probability of incurring asset poverty decreased with home ownership, higher disposable income, and greater diversification of the household portfolio. Future research should study the duration of asset poverty to complete a comprehensive picture of the asset poverty condition.
Following the Asian Financial Crisis of 1997, Korea has suffered what many consider to be a severe poverty problem. Despite policy efforts to reduce poverty and economic recovery in the early 2000s, poverty affects many households and certain households are at risk of staying in poverty once they are in it. Using longitudinal panel data from 2005 to 2014, this study defines three indicators of poverty based on asset holdings, rather than income. It then examines the dynamics of asset poverty in Korea across the study period. The study's primary goal is to reveal differences across the three indicators and identify which groups of poor people in Korea have been structurally trapped in poverty. We applied a dynamic panel model of discrete choice to the Korean Welfare Panel Study (KOWEPS) from the 1 st to 10 th waves and show that, despite the indicator, the asset poor who experienced asset poverty in the previous surveyed year or at wave 1 are likely to fall into structural and persistent poverty over time. In addition, the probability of incurring asset poverty decreased with home ownership, higher disposable income, and greater diversification of the household portfolio. Future research should study the duration of asset poverty to complete a comprehensive picture of the asset poverty condition.
In South Korea (hereafter referred to as Korea), decreases in fertility rate and mortality rate have resulted in a population that is rapidly aging over time. In 2017, Koreans aged 65 or over constituted nearly 14% of the whole population; by 2067, nearly 47% of the population will be 65 or older (Statistics Korea, 2019). In these circumstances, the high poverty rate of the elderly is of particular concern to researchers and stakeholders. In 2017, the relative income poverty rate among the elderly aged 65 or over was 43.8% as measured by 50% of the median household disposable income. This was more than twice than the rate of the general population (17.4%; OECD, 2019). The income poverty rate is particularly higher for the older age group. The poverty rate of the elderly aged over 75 was 20% higher (55.9%) than that for those aged 66 to 75 (35.5%). However, a few current studies in Korea have shown that using the income poverty measure alone may overestimate the poverty condition of the elderly, and the poverty rate would be substantially lower if measured by assets (Ahn, 2019; Choi et al., 2016; Yun et al., 2017). These studies suggest that estimating poverty by income alone may distort the true poverty condition of the elderly, and that an income measure therefore needs to be supplemented by other poverty measures including an asset-based measure. While the income poverty measure allows us to check whether someone's income falls short of a minimum living expense level, the asset poverty measure gives us insight into a household's long-term financial security (Sherraden, 1991). The purpose of this study was to provide a better understanding of the actual poverty condition of the elderly by using both income and asset poverty measures. In addition, this study extends previous research by assessing the poverty condition of the elderly using both cross-sectional and longitudinal methods. Although some recent studies in
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