The continuing importance of children in relieving elder poverty: evidence from Korea

The population of South Korea is ageing rapidly and government provision for older people is meagre. Hence the erosion of traditional family support for older people is of much concern. Yet relatively little is known about the actual financial status of elderly Koreans or the amount of economic support they receive from children. This paper addresses these issues using data from the 2006 Korean Longitudinal Study of Ageing. We find that almost 70 per cent of Koreans aged 65 or more years received financial transfers from children and that the transfers accounted for about a quarter of an average elder's income. While over 60 per cent of elders would be poor without private transfers, children's transfers substantially mitigate elder poverty, filling about one-quarter of the poverty gap. Furthermore, children's transfers tend to be proportionally larger to low-income parents, so elder income inequality is reduced by the transfers. Over 40 per cent of elders lived with a child and co-residence helps reduce elder poverty. By showing that Korean children still play a crucial role in providing financial old-age security, we demonstrate how important it is for the Korean government to design old-age policies that preserve the incentives for private assistance. This snapshot of today's Korea also has implications for other rapidly changing Asian countries that are following a similar trajectory.