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KMID : 1001320090360010307
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Social Welfare Policy
2009 Volume.36 No. 1 p.307 ~ p.327
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The effects of cash assistance programs for children on poverty and income inequality
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Jeong Chan-Mi
Lee Sang-Eun
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Abstract
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This study analyzes the effects of cash assistance programs for children on poverty and income inequality and suggests policy implications. The primary cash assistance programs for children are EITC, Child Tax Credit, and Child Allowance. The total of 7 models consisting of four single-system models and three combined models were constructed for the analysis. Using the first year data of Korea Welfare Panel Study, the effects of the 7 models were analyzed. Among the single-system models, the Child Allowance 1 model was found to be the most effective in reducing poverty, and then EITC, Child Allowance 2, CTC models were followed. As for the income distribution effects, Child Allowance 1 model was also the most effective program. However, the result of the analysis of the income distribution ratio of 3/1 showed that the most effective model is the EITC model. Among the combination models, the EITC+CTC+Child Allowance model was the most effective in reducing poverty and income inequality. However, there was little difference on the effects between the EITC+CTC+Child Allowance model and the EITC+Child Allowance model. In addition, the EITC+CTC+Child Allowance model aggravated the income distribution ratio of 3/1. Thus, the EITC+Child Allowance model may be a better alternative. This study suggests the following policy implications. First, the Earned Income Tax Credit in korea needs to be expand to a full-blown system. Second, Korea need to introduce a child allowance program in the future.
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KEYWORD
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Income maintenance, Poverty, EITC
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