Old Age Income Maintenance in South Korea: Analyzing Income Sources with the Korean Retirement and Income Study (2004-2014)

Abstract

What factors influence intergenerational private transfers from adult children to their elderly parents? What is the role of the government and the family when it comes to caring for old age income security? Previous researchers have attempted to analyze the relationship between elderly income received from private and public sources. This study aims to look at the factors that influence private transfers.

We analyze the Korea Retirement and Income Study (Hereafter, KReIS), a bi-annual longitudinal survey of elderly households and individuals from 2004 to 2014. In a study for the Korea Development Institute (KDI) Hisam Kim (2014) divided the KREIS dataset by age cohorts to produce insightful observations on income constitution and the determinants of private transfers. Our study builds off of Kims (2014) study by adding two additional waves of the KReIS panel study, analyzing a ten-year period between 2004 and 2014.

We determine that Kims conclusions hold true regarding changes to South Korean elderly income constitution by analyzing 2 additional waves of the KREIS panel study. First, South Korean elderly are working more and more with time. Secondly, public transfers are steadily increasing with time. And finally, private transfers are decreasing. This reflects Kims additional conclusion on changing South Korean perceptions that elderly income security is chiefly the responsibility of government and themselves. Our analysis of elderly income trends based on household constitution and the income trends for elderly living in 5 categories of households reveal insignificant differences between household types. We previously conjectured that the five following household types would have different trends in terms of elderly income. The types are: (1) Single elderly homes

(2) Elderly couple homes

(3) Elderly living with adult children

(4) Elderly living with adult children and also grandchildren

and finally, (5) Elderly living with grandchildren, but without adult children.

We conduct regression analysis on waves 1 and 2 of the KReIS study to determine what types of elderly receive the most financial support from their adult children. Waves 1 and 2 of the KReIS panel study are most conducive for analyzing the behavior of adult childrens financial support of their elderly parents changes. Waves 4 through 6 lump private transfers into a larger category that includes adult children, and extended family, and therefore can provide broader insight into private transfers. As this study focuses on adult children, we isolated regression analysis on waves 1 and 2 of the KReIS data. Our conclusions support preceding research, which states that non-coresiding adult children financially support their parents more than co-resident adult children do. Furthermore, these findings hold true for both KReIS waves 1 and 2. We wish to thank the South Korean National Pension Research Institute for providing the data used in this paper.