The effects of COVID-19 and response measures on poverty, household income and household consumption expenditure in South Korea
ISSN: 0144-3585
Article publication date: 21 February 2022
Issue publication date: 18 January 2023
Abstract
Purpose
In 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/approach
This 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).
Findings
COVID-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/value
A 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.
Keywords
Acknowledgements
I am especially grateful for the constructive suggestions of Climent Quintana-Domeque, Sonia Oreffice, Julian Jamison, Eleanor Jawon Choi and the anonymous referees.
This paper is based on the author's PhD thesis. The views are solely those of the author and do not necessarily represent those of author's affiliated institutions.
In the interest of transparency, data sharing and reproducibility, the author(s) of this article have made the data underlying their research openly available. It can be accessed by following the link here: https://mdis.kostat.go.kr/eng/index.do
Citation
Ha, T. (2023), "The effects of COVID-19 and response measures on poverty, household income and household consumption expenditure in South Korea", Journal of Economic Studies, Vol. 50 No. 1, pp. 3-17. https://doi.org/10.1108/JES-09-2021-0453
Publisher
:Emerald Publishing Limited
Copyright © 2022, Emerald Publishing Limited