The Effect of Social Pension on Material Hardship among Older Adults in Korea: Regression Discontinuity Estimation

Abstract

The goal of this study was to examine the effect of a social pension programme for older adults in South Korea, Basic Pension Scheme (BPS) on material hardship and subjective well-being. We apply a regression discontinuity design (RDD) to estimate the effect of the BPS on the material hardship and life satisfaction of older people between the ages of sixty-one and sixty-eight. Data come from Korea Welfare Panel Study (KOWEPS) wave 12 survey (2017, N = 3,932). The BPS benefit reduces the risks of housing hardship, bill payment delay and food insecurity. Interestingly, while the effect sizes of the BPS on mitigating the material hardship increase as income decreases, the lower-income groups were less satisfied with the pension provision than middle- and upper-income groups. This study contributes to the growing body of literature on material hardship for older adults in an Asian country facing persistent old-age poverty and immature public pensions.