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KMID : 1124020100260030073
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Korean Social Security Studies
2010 Volume.26 No. 3 p.73 ~ p.98
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Analyses of Impacts of the Public Pension based on the Difference-in-differences Mod
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Seok Jae-Eun
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Abstract
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This paper analyzed how economic status (income level, poverty rate, and spending) changes according to the receipt of public pension at senescence in comparison with the economic status right before arriving at senescence based on the difference-in-differences model, a quasi-experimental design, by using longitudinal materials from the first and third waves of the Korean Retirement and Income Panel. Analyzing how the receipt of public pension at senescence brings about differences to economic status based on the approach using longitudinal materials while controlling various differences in economic status at non-senescence will help to identify the sole effects of the introduction of public pension. Based on regression analysis of difference-in-differences, the effect of ‘interaction term for time dummy * group dummy’ was positively significant under the control of socioeconomic variables influencing income, which confirms that the difference in income level would be significant based on the effect of public pension before and after receiving it. As for poverty rate, the effect of receiving and non-receiving group dummy was significant but the effect of ‘interaction term for time dummy * group dummy’ and time dummy was not significant. The effect of ‘interaction term for time dummy * group dummy’ and group dummy on spending was not significant. The result has been verified with income levels in terms that the effect of introduction of public pension has had statistically significant impacts on economic stability during senescence. However, in terms of poverty rate, while it is clear that the receiving group is not poorer than the non-receiving group, it is not certain whether it has been influenced by the introduction of public pension. This implies that the higher poverty rate with the non-receiving group is a group characteristic originating from non-senescence. It also suggests that the effects of poverty alleviation through public pension based on the existing cross-sectional analyses may have been exaggerated with errors from group characteristics.
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KEYWORD
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public pension, difference-in-differences, longitudinal
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