The purpose of this study was to empirically analyze how the impact of public and private income transfers on reducing poverty have changed, taking into account the size and efficiency of public and private income transfers. In order to accomplish thi...
The purpose of this study was to empirically analyze how the impact of public and private income transfers on reducing poverty have changed, taking into account the size and efficiency of public and private income transfers. In order to accomplish this study purpose, this study utilized the data from Korea Labor and Income Panel Study(KLIPS) dating from 1998 to 2004 and the FGT(Foster, Greer, Thorbecke) Index was adopted to measure the size and depth of the poverty.
The major finding of this study can be summarized as follows.
First, unlike the average households, both private and public income transfers were very important income source for the households in poverty.
Second, although private income transfers were playing an important role in reducing poverty, it was considerably unstable.
Third, the role of social insurance was increased to reduce poverty. When compared to Western European countries with advanced welfare programs, social insurance in Korea is still in its rudimentary stages but its role is gradually increasing as it matures and expands.
Based on the results of this study, policy implications are as follows.
First, in order to resolve the problem of poverty in Korea, increasing of public income transfers are needed.
Second, the role of social insurance should be more emphasized. In order to increase the effectiveness of anti-poverty through social insurance, efforts are needed to increase the number of recipients. To do so, the government should seek ways to expand the range of coverage, improve the system including eligibility criteria and the pay period, and at the same time seek practical ways to expand coverage.
Third, in order to decrease the number of households in poverty under the limited budget, the government should further enhance the efficiency of public expenditure.
Finally, for long-term effects and ultimately to prevent poverty, public income transfers must be provided in the direction toward increasing an earned income with a qualitative improvement of the individuals' human capital.