Juli 2017

IZA DP No. 10909: The Effects of Lifetime Work Experience on Incidence and Severity of Elderly Poverty in Korea

Seyoung Chae, Almas Heshmati

This study investigates the characteristics that contribute to elderly poverty, mainly focusing on individuals' lifetime work experience. It adopts the heterogeneous relative poverty line which differs by gender, province of residence and over time. It calculates the work experience and obtains demographic variables using the Korean Labor and Income Panel Study's survey data for 2006, 2009, 2012 and 2015. The objective is to estimate poverty amongst elderly and explain its variations in relation to individual characteristics and lifetime work experience. Poverty is measured as the head count, poverty gap and the poverty severity indices. The poverty measures are based on the monetary dimensions of well-being namely income and consumption. The methodology used in this study is the logit model to explain incidence of poverty and the sample selection model to analyze the depth and severity of poverty. The results show evidence of a significant selection bias in all the poverty models based on income, but not on the consumption. In both income and consumption models increase in the total work years lessens the incidence of poverty and a decrease in the gap years downsizes the probability of being poor. High-income occupation and labor market participation greatly decrease the incidence of poverty. Most of the work relevant variables become insignificant in the poverty gap and severity models of consumption while both work years and gap years are significant in the income model. The number of jobs representing turnover rate significantly increases the probability of being impoverished only in the consumption model.