Analysis of the Effects of Child Allowances on the Income Inequality and Poverty (original) (raw)
2018, Korea Social Security Review
In this paper the poverty and income inequality effects of child allowances are analyzed for the years of 2018 and after. The overall income distribution function was estimated with the help of generalized beta (of type II) function. This GB(2) function has four parameters and is known to be especially useful in the analysis of income distribution. The main advantage of this approach can be summarized as follows: (1) it can model asymmetries in the distribution, (2) it can encompass other distributions such as Dagum, and Singh-Maddala (which has three parameters). Once we have parameter estimates, we can easily derive the poverty and inequality indexes. According to the estimation results, the re-distributive effects of the introduction of child allowances in 2018 are not big enough, because it only applied to four months in the year of 2018. The Gini coefficient decrease by 0.1146%, and the poverty headcount ratio also decreased by 0.1549%. But for the year of 2019 and after, the Gini index decreased from 0.3663 to 0.3651 (decreased by 0.3403%). The generalized entropy indexes also decreased by 0.113-0.751% depending on the parameters. Also the poverty headcount ratio decreased 0.17455 to 0.17498 (increased by 0.248%). For the direction of further research, it must be emphasized that the method of financing child allowances should be incorporated in the poverty and redistributive analysis.
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