Comparative Analysis of Poverty Risks in Elderly Households between Korea and Japan

Abstract

South Korea and Japan have undergone rapid demographic change (i.e., population aging and shrinking family size) in recent years, which is accompanied by widespread poverty and prevalent income disparity in elderly households. This study aims to empirically analyze the dynamic mechanism of poverty in elderly households in South Korea and its causal relationship with poverty risks or determinants from a comparative perspective in cases in Japan by using comprehensive panel data on elderly households in both countries. Estimation results suggest that, first of all, higher age and poorer health （in Korea）, and female householders （in Japan） are shown to be significant risk factors influencing poverty of the elderly. Second, higher educational background, asset holdings, and a work history of regular employment （only in Korea） are significantly associated with reducing poverty risks among elderly households. More specifically, income transfers from public pension systems are likely to have a stronger anti-poverty effect in Japan than having higher educational background. In contrast, it is demonstrated that public transfers in South Korea have no impact on alleviating the poverty risks of the elderly, while private income transfers from family members as well as current labor income earned by householders are considered to have a role as a social safety net to a certain extent in Korea.