The Effect of Cash Benefits on Households with Members with Disabilities: A Comparison Between Korea and the United States

Background/Purpose: Adults with disabilities experience significantly higher rates of poverty than nondisabled adults. To improve economic conditions for people with disabilities, disability policy has provided cash and in-kind benefits to those who experience financial hardships. However, the distributional effect of cash benefit programs on the income status of households with disabilities is unknown.

This paper provides an overview of current cash benefit programs for people with disabilities in Korea and the United States and explores the extent to which social insurance benefits, income-tested benefits, and private transfers improve the income status of households with the disabled. US households are included for comparative purposes.

Methods: Data/Samples: This study used the 2012 Korean Welfare Panel Study and the 2012 March Supplement File of the Current Population Survey. The Korean sample included 1,169 households in which at least one adult had disabilities and 4,505 households with no disabilities. The U.S. sample included 14,219 households with the disabled and 59,379 households with the non-disabled.

Measures: This study used the income-to-poverty ratio to measure the income status of households to investigate how each component of cash benefits changes the income status of households with the disabled and the non-disabled. To estimate the net effect of the existence of the disabled members in a household, this study conducted ordinary least square regression analyses of income-to-poverty ratios in these countries while controlling for householder’s age, gender, education attainment, employment status, types of households, and geographic location.

Results: This study found evidence for the significant effects of cash benefits in reducing the disparity of income status between households with and without disabled member(s). The major findings were as follows. (1) Households with the disabled were more economically deprived than households with the non-disabled in both countries. (2) The distribution effect of all types of cash benefits on improving income status was considerably larger in households with the disabled than in households with the non-disabled in Korea. Although the cash benefits improved the income status of households with the disabled, the income status of households with the disabled was still lower than that of households with the non-disabled even after all the cash benefits were accounted for. (3) The income status of Korean households with the disabled were lower than that of their U.S. household counterparts before cash benefits and even more so after all cash benefits were accounted for. (4) Social insurance benefits were more effective in the U.S. and the income-tested benefits were more effective in Korea in improving the income status of households with the disabled while controlling for other variables.

Conclusions/Implications: Findings suggest the criticality of exploring policy initiatives that will reinforce social insurance programs for people with disabilities who are economically disadvantaged and alleviate the income disparities found between households with and without a disabled member(s). Further studies could examine whether the cash benefits affect primarily those below the poverty line among households with the disabled and the distributional effects based on the existence of members with disabilities