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KMID : 1124020040200020129
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Korean Social Security Studies
2004 Volume.20 No. 2 p.129 ~ p.150
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The Effects of Government Transfer Programs on Income Distribution and Labor Supply
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Kang Byung-Goo
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Abstract
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Since the economic crisis in 1997, there has been increasing demand for the expansion of social welfare expenditures in Korea. At the same time the welfare system has been criticized by its inefficiency. According to the analysis with National Survey on the Low-Income Classes and Self-Reliance Program, the relative poverty rate which is measured in terms of the 50% of household median income was 20.75% in 2002. The same analysis showed that the effects of government transfer programs on poverty reduction and income redistribution were insignificant. Also, the negative effect of government transfer programs on labor supply was smaller than that of unearned income. Implications derived from the analysis are as follows. While the government transfer programs should be expanded to protect the poor, the Korean welfare system should be restructured to minimize welfare loss. For the efficient transfer programs need to closely link with active labor market policies.
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KEYWORD
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government transfer program, income distribution, labor supply
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