(WITHDRAWN) Dynamics of Asset Poverty in South Korea, 2005 to 2014

Background and Purpose: Research on poverty dynamics tends to focus on transitions in and out of income poverty. Additionally, levels and changes of assets and wealth shape the short- and long-term economic well-being of families. Yet, little is known about asset poverty dynamics and how these are different from income poverty dynamics. By examining the dynamics of asset poverty across a ten-year period, our study aims to reveal which groups have been structurally trapped in poverty and unable to take advantage of economic opportunities over the last decade.

Methods: We applied the dynamic panel model of discrete choice to the Korean Welfare Panel Study (KOWEPS) from the 1^st to 10^th waves (2005 to 2014). We defined three asset poverty lines: resources for future consumption (net worth; 1 and financial assets; 2), and socioeconomic development (home ownership; 3). From a consumption perspective, the asset poor was defined as a household with insufficient assets (net worth or financial assets) to enable it to meet basic needs (minimum living standard) for a period of time (six months for net worth and three months for financial assets). From a development perspective, the asset poor was defined as a household whose value of assets was less than a certain amount of assets necessary (down payment) to achieve home ownership. For each poverty line, 1,869 to 5,273 households who experienced asset poverty for at least one year during the observation period (2005 – 2014) were analyzed.

Results: This study revealed three main findings: (a) asset poverty state in the previous year significantly increased the probability to incur current asset poverty by 14-20%; (b) the largest effect of lagged poverty state was seen when defining assets as a resource for future development; and (c) the probability of incurring asset poverty decreased with home ownership, higher disposable income, and greater diversification of the household portfolio.

Conclusions and Implications: This study suggests the asset poor are likely to fall into structural and persistent poverty over time. We describe how future research should study the duration of asset poverty to complete a comprehensive picture of the asset poverty condition. Further, asset-based interventions are needed to reduce asset poverty among the persistently poor. At a national level, policy makers and researchers should consider alternative measures of poverty based on not only income but also the assets at a household’s disposal.