The Effects of Old-Age Public Transfer on the Well-Being of Older Adults: The Case of Social Pension in South Korea

OBJECTIVES: This study examines the effects of the social pension reform on the well-being of older adults in Korea. Our study provides an estimate of the impacts of social pension in an industrialized and urbanized context. METHODS: We use monthly panel data from the Household Income and Expenditure Survey of the Korea Statistical Office. We identify the effects of social pension by utilizing an exogenous variation in the benefit level generated by the reform in 2014. We apply a triple-differences approach to remove potential selection biases related to program participation. RESULTS: The higher benefit increases gross income. It does not decrease primary income and private transfer income. It increases consumption and reduces poverty significantly. DISCUSSION: Our findings contrast with those from the literature. The Korean literature fails to find positive effects on the well-being of older persons. The literature of other countries finds negative incentive effects. The discrepancy may result from differences in methodological approaches and social and cultural contexts and institutional characteristics of the social pension.