The Impact of Korean Poverty Alleviation Program on Changes in the Life Satisfaction Level

1. Backgrounds and Purpose

This paper evaluates the impact of the National Basic Livelihood Security (NBLS) system, which has been the primary public assistance program in South Korea to assist low-income families, on changes in life satisfaction level at the individual level from 2014 to 2015. Looking at the studies related to the NBLS program, many studies have inspected the NBLS program effect on the poverty reduction, income, labor supply, utilization level of health care utilization. However, there is no study regarding its impact on the life satisfaction level which is the subjective indicator. Life satisfaction level is comprised of eight sub-variables health, household income, residential environment, family relations, job, social relations, leisure life, and overall, which are related to the objective indicators mentioned above. Thus, examining the NBLS impact on subjective indicators will complement the studies which use objective indicators.

2. Methods

This study uses 2014, 2015 and 2016 (9^th, 10^th, and 11^thwave) of the Korean Welfare Panel Study (KOWEPS) survey data, which is the second largest panel data set with various social and economic variables. Regarding research methods, we employ a difference in discontinuity (Diff in Disc) design which combines a difference in difference (DID) analysis and regression discontinuity (RD) design. Through the Diff in Disc analysis, we examine the difference in satisfaction levels between before and after program participation and evaluate the discontinuity. The fact that program participation is decided by whether pre-household income is below the official poverty line allows us to adopt RD design. Considering that our design includes an RD analysis, we limit the sample of which pre-program household income is below the official poverty for a single family in the year 2014.

3. Results

Through the DID analysis, we find that the NBLS participation increases the satisfaction level of residential environment (0.15p, p<0.001), family relations (0.10p, p<0.01), social relations (0.06p, p<0.1), leisure life (0.10p, p<0.5), overall (0.06p, p<0.5). After then, we perform the two-stage least squares (2SLS) method which fit the fuzzy regression discontinuity design using Eligibility (pre-program household income in the year 2013 < official poverty line in the year 2014) as an instrument variable. Through this analysis, we find that those increases are not statistically significant.

4. Conclusion

The NBLS participation results in increases in life satisfaction levels, however, causal relationship between the NBLS participation and life satisfaction level did not appear. There should be more effort to improve the NBLS program to increase not only the objective outcomes but also the subjective outcomes