Social engagement and health in an aging society: Impact of Basic Old-Age Pension in Korea

Abstract

Despite older people’s notable contributions to economic growth in Korea, a significant proportion of them were left financially unprepared for old age and faced a high risk of poverty after retirement. In 2007, the National Pension was reformed to gradually lower the income replacement ratio from 60 % to 40 %. The Korean government implemented the Basic Old-Age Pension (BOAP) to compensate for the loss in pension income in 2008. While the BAOP benefits mitigate income poverty, it may also have spillover effects on social activities and health outcomes that older people are likely to be deprived of. We use the 2006–2020 Korean Longitudinal Study of Aging for the analysis. Using a doubly robust difference-in-differences model and event study, we investigate the impact of BOAP on social engagement and the health of older people. The results show that BOAP recipients tend to have more frequent meetings with children and are likely to have a better relationship with children while they are less likely to participate in social groups and have fewer social group meetings. These results are more evident among those recipients who have received pension benefits for longer years. We find a greater positive impact of BOAP on the health of non-employed, non-married, and poor recipients and the social activities of women, employed, and non-poor recipients. The impact of BOAP may vary by gender, employment status, marital status, and poverty status but the overall results emphasize the continual assistance of BOAP in promoting the social engagement and health of older Koreans.