IDEAS home Printed from https://ideas.repec.org/a/eee/jpolmo/v42y2020i2p349-366.html
   My bibliography  Save this article

Social protection for happiness? The impact of social pension reform on subjective well-being of the Korean elderly

Author

Listed:
  • Pak, Tae-Young

Abstract

Expanding the scope of the traditional indicators used to assess economic progress with measures of subjective well-being has been of growing importance in policy modeling. A recent Stiglitz-Sen-Fitoussi report argued that policy decisions and welfare evaluations should be approached from a broader perspective on well-being and take into account metrics derived from self-reports of living conditions. To this end, we evaluate the efficacy of the 2014 social pension reform in South Korea using various measures of subjective well-being. The South Korean government introduced a basic old-age pension in 2008 and doubled its monthly benefits in 2014. The reform in 2014 represents one of the largest social welfare expansions in South Korean history, with an aim to improve seniors’ quality of life. Using data from the Korean Longitudinal Study of Aging, we estimate a matched difference-in-differences model that isolates the causal effects of the benefit increase attributable to the reform. Results show that the reform was associated with an average of 4.8–5.7% increase in financial satisfaction among beneficiaries, and that this correlation was more pronounced for retirees, seniors above age 70, and those at the bottom of wealth distribution. However, there is insufficient evidence to conclude that satisfaction with health status, parent-child relationship, and overall quality of life has improved in response. Our findings are in contrast to the past evidence on objective welfare gains associated with pension expansion. Taken together this study calls for the use of self-reported well-being data in policy evaluation.

Suggested Citation

  • Pak, Tae-Young, 2020. "Social protection for happiness? The impact of social pension reform on subjective well-being of the Korean elderly," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 349-366.
  • Handle: RePEc:eee:jpolmo:v:42:y:2020:i:2:p:349-366
    DOI: 10.1016/j.jpolmod.2019.12.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0161893820300016
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jpolmod.2019.12.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Anne Case, 2004. "Does Money Protect Health Status? Evidence from South African Pensions," NBER Chapters, in: Perspectives on the Economics of Aging, pages 287-312, National Bureau of Economic Research, Inc.
    2. Randall S. Jones & Satoshi Urasawa, 2014. "Reducing the High Rate of Poverty Among the Elderly in Korea," OECD Economics Department Working Papers 1163, OECD Publishing.
    3. Hubbard, R Glenn & Skinner, Jonathan & Zeldes, Stephen P, 1995. "Precautionary Saving and Social Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 360-399, April.
    4. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    5. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
    6. Marianne Bertrand & Sendhil Mullainathan & Douglas Miller, 2003. "Public Policy and Extended Families: Evidence from Pensions in South Africa," The World Bank Economic Review, World Bank Group, vol. 17(1), pages 27-50, June.
    7. Bonsang, Eric & Adam, Stéphane & Perelman, Sergio, 2012. "Does retirement affect cognitive functioning?," Journal of Health Economics, Elsevier, vol. 31(3), pages 490-501.
    8. Powers, Elizabeth T., 1998. "Does means-testing welfare discourage saving? evidence from a change in AFDC policy in the United States," Journal of Public Economics, Elsevier, vol. 68(1), pages 33-53, April.
    9. Barbara Sianesi, 2004. "An Evaluation of the Swedish System of Active Labor Market Programs in the 1990s," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 133-155, February.
    10. Dethier, Jean-Jacques & Pestieau, Pierre & Ali, Rabia, 2010. "Universal minimum old age pensions : impact on poverty and fiscal cost in 18 Latin American countries," Policy Research Working Paper Series 5292, The World Bank.
    11. Cristina Martinez & Tamara Weyman & Jouke van Dijk (ed.), 2017. "Demographic Transition, Labour Markets and Regional Resilience," Advances in Spatial Science, Springer, number 978-3-319-63197-4, Fall.
    12. Krueger, Alan B. & Schkade, David A., 2008. "The reliability of subjective well-being measures," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1833-1845, August.
    13. Cheng, Lingguo & Liu, Hong & Zhang, Ye & Zhao, Zhong, 2018. "The health implications of social pensions: Evidence from China's new rural pension scheme," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 53-77.
    14. Galiani, Sebastian & Gertler, Paul & Bando, Rosangela, 2016. "Non-contributory pensions," Labour Economics, Elsevier, vol. 38(C), pages 47-58.
    15. Rosangela Bando & Sebastian Galiani & Paul Gertler, 2020. "The Effects of Noncontributory Pensions on Material and Subjective Well-Being," Economic Development and Cultural Change, University of Chicago Press, vol. 68(4), pages 1233-1255.
    16. Nelissen, Jan H. M. & Institute, Economic, 1999. "A Payable Alternative for the Dutch Old-Age Pension System," Journal of Policy Modeling, Elsevier, vol. 21(2), pages 275-282, March.
    17. Juarez, Laura, 2009. "Crowding out of private support to the elderly: Evidence from a demogrant in Mexico," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 454-463, April.
    18. Sunhwa Lee, 2017. "Population Ageing and Retirement Security in Korea," Advances in Spatial Science, in: Cristina Martinez & Tamara Weyman & Jouke van Dijk (ed.), Demographic Transition, Labour Markets and Regional Resilience, chapter 0, pages 199-215, Springer.
    19. Roger BEATTIE, 2000. "Social protection for all: But how?," International Labour Review, International Labour Organization, vol. 139(2), pages 129-148, June.
    20. Barrientos, Armando, 2003. "What Is the Impact of Non-Contributory Pensions on Poverty? Estimates from Brazil and South Africa," Development Economics and Public Policy Working Papers 30556, University of Manchester, Institute for Development Policy and Management (IDPM).
    21. Cuesta, Jose & Olivera, Mauricio, 2014. "The impact of social security reform on the labor market: The case of Colombia," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 1118-1134.
    22. Nanak Kakwani & Kalanidhi Subbarao, 2007. "Poverty among the elderly in Sub-Saharan Africa and the role of social pensions," Journal of Development Studies, Taylor & Francis Journals, vol. 43(6), pages 987-1008.
    23. Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June.
    24. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 605-654.
    25. Armando Barrientos, 2003. "Pensions and Development in the South," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 28(4), pages 696-711, October.
    26. Abels,Miglena & Guven,Melis U., 2016. "Pension systems in Sub-Saharan Africa : brief review of design parameters and key performance indicators," Policy Research Working Paper Series 109428, The World Bank.
    27. Esther Duflo, 2000. "Child Health and Household Resources in South Africa: Evidence from the Old Age Pension Program," American Economic Review, American Economic Association, vol. 90(2), pages 393-398, May.
    28. Christian Kroll & Jan Delhey, 2013. "A Happy Nation? Opportunities and Challenges of Using Subjective Indicators in Policymaking," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 114(1), pages 13-28, October.
    29. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
    30. Willmore, Larry, 2007. "Universal Pensions for Developing Countries," World Development, Elsevier, vol. 35(1), pages 24-51, January.
    31. Easterlin, Richard A., 1974. "Does Economic Growth Improve the Human Lot? Some Empirical Evidence," MPRA Paper 111773, University Library of Munich, Germany.
    32. Andrei Bougrov & Robert Johnson & Benno Ndulo & Pedro Paez & Avinash Persaud & Heidemarie Wieczorek-Zeul & Akhtar Aziz Zeti & Charles Goodhart & Jomo Kwame Sundaram & Youssef Boutros-Ghali & José Anto, 2010. "The Stiglitz Report," Working Papers hal-03415638, HAL.
    33. Cox, Donald & Jimenez, Emmanuel, 1989. "Private transfers and public policy in developing countries : a case study for Peru," Policy Research Working Paper Series 345, The World Bank.
    34. Sebastian Galiani & Federico Weinschelbaum, 2012. "Modeling Informality Formally: Households And Firms," Economic Inquiry, Western Economic Association International, vol. 50(3), pages 821-838, July.
    35. Aarón Salinas-Rodríguez & Ma Del Pilar Torres-Pereda & Betty Manrique-Espinoza & Karla Moreno-Tamayo & Martha María Téllez-Rojo Solís, 2014. "Impact of the Non-Contributory Social Pension Program 70 y más on Older Adults’ Mental Well-Being," PLOS ONE, Public Library of Science, vol. 9(11), pages 1-10, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hwang, Inuk & Lee, Tae-Jin, 2022. "Health improvements of older adults based on benefit duration: Lessons from Korean social pension policies," Social Science & Medicine, Elsevier, vol. 315(C).
    2. Yu-Chuan Chen & Yung-Ho Chiu & Tzu-Han Chang & Tai-Yu Lin, 2023. "Sustainable Development, Government Efficiency, and People’s Happiness," Journal of Happiness Studies, Springer, vol. 24(4), pages 1549-1578, April.
    3. Albani, Viviana & Brown, Heather & Vera-Toscano, Esperanza & Kingston, Andrew & Eikemo, Terje Andreas & Bambra, Clare, 2022. "Investigating the impact on mental wellbeing of an increase in pensions: A longitudinal analysis by area-level deprivation in England, 1998–2002," Social Science & Medicine, Elsevier, vol. 311(C).
    4. Pak, Tae-Young, 2021. "What are the effects of expanding social pension on health? Evidence from the Basic Pension in South Korea," The Journal of the Economics of Ageing, Elsevier, vol. 18(C).
    5. Simpson, Julija & Albani, Viviana & Bell, Zoe & Bambra, Clare & Brown, Heather, 2021. "Effects of social security policy reforms on mental health and inequalities: A systematic review of observational studies in high-income countries," Social Science & Medicine, Elsevier, vol. 272(C).
    6. Bando, Rosangela & Galiani, Sebastian & Gertler, Paul, 2022. "Another brick on the wall: On the effects of non-contributory pensions on material and subjective well being," Journal of Economic Behavior & Organization, Elsevier, vol. 195(C), pages 16-26.
    7. García-Corchero, Juan David & Jiménez-Rubio, Dolores, 2022. "How do policy levers shape the quality of a national health system?," Journal of Policy Modeling, Elsevier, vol. 44(1), pages 203-221.
    8. Jackqueline Kiptui & Peter Mwaura & David Gichuhi, 2021. "Influence of social protection on access to health care among elderly persons in informal settlements in Nakuru Town, Kenya," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(7), pages 310-318, October.
    9. Qing Yang & Chaozheng Zhang, 2023. "How Does the Renewal of Urban Villages Affect the Resettled Villagers’ Subjective Well-Being? A Case Study in Wuhan, China," Land, MDPI, vol. 12(8), pages 1-22, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pak, Tae-Young, 2020. "Social protection for happiness? The impact of social pension reform on subjective well-being of the Korean elderly," MPRA Paper 115817, University Library of Munich, Germany.
    2. Pak, Tae-Young, 2021. "What are the effects of expanding social pension on health? Evidence from the Basic Pension in South Korea," The Journal of the Economics of Ageing, Elsevier, vol. 18(C).
    3. Anqi Zhang & Katsushi S. Imai, 2022. "Does a Universal Pension Reduce Elderly Poverty in China?," Discussion Paper Series DP2022-30, Research Institute for Economics & Business Administration, Kobe University.
    4. Marisa Coetzee, 2013. "Finding the Benefits: Estimating the Impact of The South African Child Support Grant," South African Journal of Economics, Economic Society of South Africa, vol. 81(3), pages 427-450, September.
    5. Jing You & Miguel Niño‐Zarazúa, 2019. "The Intergenerational Impact of China's New Rural Pension Scheme," Population and Development Review, The Population Council, Inc., vol. 45(S1), pages 47-95, December.
    6. Anqi Zhang & Katsushi S. Imai, 2022. "Does a Universal Pension Reduce Elderly Poverty in China?," Economics Discussion Paper Series 2203, Economics, The University of Manchester.
    7. George Mutasa, 2012. "Disability Grant and Individual Labour Force Participation: The Case of South Africa," Working Papers 12156, University of Cape Town, Development Policy Research Unit.
    8. Maria Laura Alzua & Natalia Cantet & Ana Dammert & Damilola Olajide, 2019. "Welfare Effects of a Non-Contributory Old Age Pension: Experimental Evidence for Ekiti State, Nigeria," Working Papers PIERI 2019-15, PEP-PIERI.
    9. María Laura Alzua & Natalia Cantet & Ana C. Dammert & Damilola Olajide, 2023. "The Wellbeing Effects of an Old Age Pension: Experimental Evidence for Ekiti State in Nigeria," CEDLAS, Working Papers 0322, CEDLAS, Universidad Nacional de La Plata.
    10. Dettmann, E. & Becker, C. & Schmeißer, C., 2011. "Distance functions for matching in small samples," Computational Statistics & Data Analysis, Elsevier, vol. 55(5), pages 1942-1960, May.
    11. Galiani, Sebastian & Gertler, Paul & Bando, Rosangela, 2016. "Non-contributory pensions," Labour Economics, Elsevier, vol. 38(C), pages 47-58.
    12. Ggombe Kasim Munyegera & Akampumuza Precious, 2018. "The gender gap in firm productivity in Rwanda: Evidence from establishment and household enterprise data," WIDER Working Paper Series wp-2018-100, World Institute for Development Economic Research (UNU-WIDER).
    13. Solomon Asfaw & Silvio Daidone & Benjamin Davis & Josh Dewbre & Alessandro Romeo & Paul Winters & Katia Covarrubias & Habiba Djebbari, 2012. "Analytical Framework for Evaluating the Productive Impact of Cash Transfer Programmes on Household Behaviour – Methodological Guidelines for the From Protection to Production Project," Working Papers 101, International Policy Centre for Inclusive Growth.
    14. Emma Aguila & Jung Ho Park & Alma Vega, 2020. "Living Arrangements and Supplemental Income Programs for Older Adults in Mexico," Demography, Springer;Population Association of America (PAA), vol. 57(4), pages 1345-1368, August.
    15. Dan Pan, 2014. "The Impact of Agricultural Extension on Farmer Nutrient Management Behavior in Chinese Rice Production: A Household-Level Analysis," Sustainability, MDPI, vol. 6(10), pages 1-22, September.
    16. Paudel, G. & Krishna, V. & McDonald, A., 2018. "Why some inferior technologies succeed? Examining the diffusion and impacts of rotavator tillage in Nepal Terai," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277149, International Association of Agricultural Economists.
    17. Aguila, Emma & Smith, James P., 2020. "Supplemental income program design: A cluster-randomized controlled trial to examine the health and wellbeing effects on older adults by gender, duration, and payment frequency," Social Science & Medicine, Elsevier, vol. 259(C).
    18. Bahadır Dursun & Resul Cesur, 2016. "Transforming lives: the impact of compulsory schooling on hope and happiness," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(3), pages 911-956, July.
    19. Piekalkiewicz, Marcin, 2016. "Money, Social Capital and Materialism. Evidence from Happiness Data," EconStor Preprints 130185, ZBW - Leibniz Information Centre for Economics.
    20. Wendimu, Mengistu Assefa & Henningsen, Arne & Gibbon, Peter, 2016. "Sugarcane Outgrowers in Ethiopia: “Forced” to Remain Poor?," World Development, Elsevier, vol. 83(C), pages 84-97.

    More about this item

    Keywords

    Subjective well-being; Life satisfaction; Public transfer; Non-contributory pension; Elderly poverty;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jpolmo:v:42:y:2020:i:2:p:349-366. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505735 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.