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KMID : 1124020200360020069
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Korean Social Security Studies
2020 Volume.36 No. 2 p.69 ~ p.91
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The Effect of Social Welfare Spending on Household Wealth Accumulation
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Jeong Jun-Ho
Cheon Byung-You
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Abstract
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This study analyzes the relationship between the degree of social welfare spending and levels of household net wealth, controlling the explanatory variables such as household income, inheritance and gift and socio-economic characteristics, through a hierarchical and linear regression model. In addition, along household wealth distribution the substitution effect is estimated using a unconditional quantile regression model. First, the multivariate hierarchical linear regression model presents a statistically significant negative relationship between the degree of welfare spending and levels of household net wealth across regions. This implies that social services provided by the local state, are a substitute for the accumulation of household wealth and explains to some extent observed differences in levels of household net wealth across regions. Second, in the case of Korea, households under the bottom 30 percentile along net wealth distribution can hardly afford to accumulate wealth and the substitution effect is in fact not statistically significant. However, this effect has a significant effect on households under the 30-70 percentiles along net wealth distribution, that is, the broad middle class. In terms of international comparisons, the level of household wealth inequality in Korea is relatively low. Therefore, this substitution effect may be seen as a small part of maintaining this low level of household wealth inequality.
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KEYWORD
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social welfare spending, substitution effect, household wealth level, wealth inequality, national survey of tax and benefit
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