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KMID : 1001320210480010063
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Social Welfare Policy
2021 Volume.48 No. 1 p.63 ~ p.95
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The Influence of COVID-19 Economic Impact Payment on Household Consumption in South Korea - Focusing on Comparison by Income Classes -
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Nam Jae-Hyun
Lee Rae-Hyuck
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Abstract
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We examined the influence of COVID-19 Economic Impact Payment (COVID-19 EIP), which was transferred to all citizens in South Korea from the middle of May 2020, on household consumption. Using the monthly basis data of the Household Income and Expenditure Survey for years the 2019-2020, we exploited difference-in-difference-in-differences (DDD) with multiple treatments to compare the household expenditures between treatment groups and a comparison group. First of all, we confirmed that household income surged in May 2020 due to the EIP and it’s benefits were different depending on the number of household members. Also we found that the higher the household income, the more EIP benefits were received, which means that the EIP was regressive according to income classes. On the other hand, the overall trends of household consumption showed a decline from February 2020 and then rebound in May 2020 regardless of the type of expenditures. However, these patterns were quite different by the income classes?the top income group experienced relatively little changes in expenditures while the low income groups experienced large changes. The DDD analyses showed that, compared with the top income group as a reference group, low-income households as treatment groups experienced increases in consumption overall due to the EIP. In particular, it contributed to a significant increase in the total household expenditures and the consumption expenditures for the first and second income quintiles, which indicated that the EIP’s effects were pronounced for low-income households. Meanwhile, the EIP’s effects varied according to types of the consumption item, and also it’s effects were not uniform to the subgroups.
Based on the results, we discussed policy implications to ensure the effectiveness of the EIP and to direct additional payments toward an effective way.
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KEYWORD
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COVID-19, Economic Impact Payment, Household Consumption, Income Class, Diference-in-Difference-in-Differences, Household Income and Expenditure Survey
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