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The Impact of Changes in Household Living Arrangements on the Poverty Rate among Elderly People in South Korea(2016)

by 사용자 SNU Sociology 2019. 9. 13.

Author: Keong Suk Park (Professor, Department of Sociology, Seoul National University) 

                Mi Seon Kim (PhD. Student, Department of Sociology, Seoul National University)

 

Source: Korean Journal of Sociology, 50(1), 221-253.


 Decreases in the number of households with elderly parents living with their children and increases in the number of elderly single-person or couple households are the main factors contributing to increasing poverty rate among elderly people in South Korea.

 

Rather than a direct cause and effect relationship, the authors argue that the heightened poverty rate is the result of attenuated sources of income, other than family support, for elderly people in South Korea, where a more universal social security system is necessary.


Abstract

  Household living arrangements for elderly people have changed significantly over the past 20 years in South Korea. While the proportion of elderly couples or individuals living alone significantly increased, the proportion of elderly people living with their children has decreased significantly.

  This study analyzes, empirically, the impact these changes in elderly people’s living arrangements have on poverty rate fluctuations. The data used is based on the Korean Income and Labor Panel Survey (KLIPS) conducted in 1998, 2008, and 2011. This study decomposes the effects of changes in the poverty rate into the effects of change in household living arrangement as well as household gender, and age compositions.

 

  The results demonstrate that the increase in the number of households of elderly Koreans living alone or as a couple and the decrease in the number of elderly Koreans living with their children are directly related to the increase in the relative poverty rate among Korean elderly people. In the face of declining intergenerational co-residence and limited private money transfers from children living separately, social insurance and public assistance is growing to help defend against poverty. Nevertheless, poverty risk was increased when elderly people live independently from their children over the observation period.

 

  Finally, the causality between the increasing number of elderly people living separately from their children and the increase in their relative poverty rate is explored. Rather than inner causality between the two phenomena, this paper argues that the vulnerability of living independently, due to lacking universal social security systems, influences the causal relationship between the increasing risk of poverty and deteriorating family support systems.

 

Keywords: living arrangements, the elderly, poverty rate, standardized factor decomposition

I. Introduction

 

In Korea, the problem of elderly poverty is getting worse despite the expansion of public support. Among the various structural conditions that determine the income status of the elderly, including income distribution problems inherent to the overall labor market and the public welfare system, this paper examines the effects of diminishing family support on fluctuations in the elderly poverty rate.

 

This paper operationalizes change in the family support systems for the elderly as change in the household living arrangements of the elderly. Because South Korea has yet to implement sufficient social pension and universal welfare systems for the elderly, this paper speculates that as the rate of elderly living independently increases, this changed living arrangement will impact the income status of elderly people, and thus, increase poverty risk for the entire elderly population.

 

For this reason, this study analyzes how changes to elderly living arrangements have affected the elderly poverty rate in South Korea, considering differences in gender, age group, and income sources.

 

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2. Changes to elderly Korean people’s living arrangements and fluctuations in the elderly poverty rate in Korea

 

The most notable change in the relationships in families of elderly Koreans is the significant increase in the number of elderly Koreans living alone or as a couple (ages 65 or older) when comparing the Population Census statistics of 1990 and 2010. As has been confirmed by abundant prior research, in Korean society, the elderly poverty rate varies largely based on living arrangements, due to the fact that the main source of income for elderly people in Korea is the earned income of their cohabitating children.

 

The main sources of income for elderly single-person households and elderly couple households are private and public money transfers, which, in Korea, are limited in size, so these households face higher risk for poverty.

 

3. Data and methodology

 

The data used for this research is the Korean Income and Labor Panel Survey (KLIPS), conducted from 1998 to 2012, in which income data is available. KLIPS includes data regarding labor, income, and household member profile of households, moreover, it surveyed single-person households from the time it was first conducted, in 1998. This study used KLIPS data from 1998, 2008, and 2011.

 

One of the main variables, income, was measured by household unit. Households were deemed to be in “absolute poverty” when household income was below the absolute poverty line based on the minimum cost of living, as determined by the Korean Ministry of Health and Welfare, multiplied by the members of the household. Households were deemed to be in “relative poverty” when household income was less than 50% of the median income, where total household was divided by the number of household members. Types of household living arrangement were categorized as elderly single-person, elderly couple, elderly-headed (two or more generations), non-elderly headed, and non-blood-related elderly households. Finally, elderly age groups were subdivided into a binary consisting of people 65 to 74 years old and 75 years or older.

 

The methodology used was Standardized Decomposition Analysis. This method is employed to standardize the effectiveness of other relevant factors in order to isolate the effect of the variable or variables of interest. In this study it is used so that fluctuations in poverty rate (t...- T...) are decomposed into the effects of change in (1) household living arrangement of the elderly (I factor/effect), (2) gender composition (J factor/effect), (3) age group composition (K factor/effect), and lastly, (4) increased or decreased rate of poverty (r factor) with each of the other factors, (1)-(3), standardized.

Formula for Standardized Decomposition Analysis

4. Results

1) Descriptive statistics

In terms of household living arrangements, the number of elderly Koreans living alone or as a couple generally increased from 1998 to 2008, while the number of non-elderly headed households decreased significantly.

 

Looking at the average household income by type of household, the average income of non-elderly headed households is the highest overall, followed, in order, by elderly-headed households, then elderly couple households, and finally elderly single-person households.

 

On the other hand, from 1998 to 2011, the income structure of elderly Koreans was cut in half. The elderly living together with their children rely mostly on their children's earned income. However, elderly people living independently (away from their children) rely on both support from their children, via private money transfer, as well as their own businesses/labor and public assistance.

 

With regard to differences in poverty rate by household type, sex, and age, non-elderly-headed households experienced the lowest rate of poverty in terms of both absolute and relative poverty, and in the order of elderly-headed, elderly couple, and elderly single-person households the poverty rates increased. In all household types, except for non-elderly headed households, the poverty rate among females is higher than that of men, and it is higher among those aged 75 and older than those younger than 75 years old.

 

With respect to the trend poverty rates, the absolute poverty rate decreased between 1998 and 2008, but the relative poverty rate increased over the same time period. Upon closer inspection, the relative poverty rate increased overall because the proportion of elderly people in households with relatively high rates of relative poverty, such as one-person and elderly couple households, has increased even though the relative poverty rate for each household type decreased.

 

2) Decomposition of change factors regarding the elderly poverty rate in South Korea

 

Decomposition analysis shows that among the factors related to increases in the elderly poverty rate, changed living arrangement had the most direct correlation out of the factors; household living arrangement, gender composition, and elderly age group.

 

The absolute poverty rate decreased by 11.9 percent overall, between 1998 and 2008. However, it could have been reduced by 20 percent if the household composition, gender composition, and age composition did not change over the same time period. The absolute poverty rate increased by 7.4 percent with regards to changes in living arrangements.

 

The change in relative poverty rates is more evident, with a 6.2% increase in the relative poverty rate between 1998 and 2008. If household composition, sex, and age remained constant, the relative poverty rate could have been reduced by 3.5%. The change in household composition greatly offset the reduction effect of relative poverty, resulting in an increase in the overall relative poverty rate during the period of 1998 to 2011 in South Korea.

 

Decomposition of Poverty Rate Change Factors for Elderly People in South Korea

(unit: %)

 

Change in Absolute Poverty Rate

Change in Relative Poverty Rate

1998-2008

2008-2011

1998-2008

2008-2011

I effect

Living Arrangement

7.37

0.58

9.20

0.76

J effect

Gender

0.04

0.04

0.00

0.06

K effect

Age

0.61

0.75

0.49

0.65

r effect

Poverty Rate

-19.96

-6.59

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