Abstract.Day2.Kim

Population Aging, Inequality, and Old-Age Support Systems: the Role of Familial Transfers in South Korea

Hyun Kyung Kim and Sang-Hyop Lee

By utilizing a micro NTA of South Korea by income and living arrangement, this study examines the role of familial transfers in the old-age support system and in reducing inequality. the results suggest that private transfers in extended households play a role in reducing consumption inequality for the elderly in South Korea. By income level, the elderly in low-income households are more dependent on public transfers. the elderly in nuclear high-income households rely heavily on their own asset for consumption, whereas those in extended high-income households are more dependent on private transfers. A counterfactual analysis suggests that the consumption inequality for the elderly has increased over time not only because the population is aging but because the share of extended households is rapidly declining in South Korea. Notably, a decrease in extended households contributes more significantly to the increase in consumption inequality for the elderly ages 70 and above.