A Studay on the National Basic Livelihood Security System: Focusing on Work Incentive

Abstract

With the foreign currency crisis in 1997 in Korea, necessity of universal welfare that the government should guarantee the basic livelihood of people systematically was suggested due to the increase of low-incomers. Accordingly, the National Basic Livelihood Security System (NBLSS) was introduced in October, 2000, which made the targets of cash benefits increase by including the workable poor who had not been covered by cash benefits subject to participating in self-support programs. The NBLSS is significant because it is the last social security net that the government guarantees the minimum livelihood of people as their right. Therefore, in this study, it was assumed that special beneficiaries receiving more benefits than regular beneficiaries would depend more on welfare, and their work incentive would be lower than regular beneficiaries. And the beneficiaries under the NBLSS were divided into special beneficiaries and regular beneficiaries, and then it was reviewed on how their economic activities, work days and earned income affect their work incentive. As a result of research, the work incentive of special beneficiaries was positive (+), and that of regular beneficiaries was rather negative (-). To interpret in another way, about 19% of special beneficiaries were workable, being 109 out of 576

and about 53% of regular beneficiaries were workable. Under this assumption, The fact that above 50% of regular beneficiaries have negative tendency in work incentive shows that benefit provision under the NBLSS has been inappropriate

and the fact that special iv beneficiaries among whom 20% or less are workable have positive tendency in work incentive shows that they work to supplement lacking benefit individually. Eventually, it could be reinterpreted that all beneficiaries provide the minimal amount of work to main their eligibility for benefits. With coming benefit system for special beneficiaries by levels, which will be introduced in 2014, it is intended in this study to analyze the work incentive related to work ability, which has been evaluated in various aspects with every attempt for system improvement, and the work incentive related to beneficiary type, which has never been discussed except for labor supply. Also, this study of using the transverse section data differently from the previous studies of having used longitudinal section data contains information at a certain time. However, this study is intended to verify the work incentive of beneficiaries of different benefit types (special & regular) at a certain time, with the concept that the work incentive pattern is more influenced by personal properties of each beneficiary rather than by continuously influenced by the NBLSS because the work incentive pattern of a subject beneficiary, which appear with the changes of benefit level with time intervals is not a factor of maturation with time passed.