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Effects of disability benefits on poverty reductions: Comparing allowance and pension

Lee, Sunwoo 1

1인제대학교

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ABSTRACT

The purpose of this study is to measure effects of disability benefits on poverty reduction using poverty rates, poverty gaps, and poverty gap rates(PGR). Poverty rates measure poverty incidence, but it is not an appropriate measure for poverty intensity. Poverty gaps and PGRs are able to measure poverty incidence and poverty intensity. The analysis results show that the effects of disability benefits on poverty rates were much smaller than their effects on poverty gaps and PGRs. It seems to be resulted from differences in proportions of beneficiaries among the total registered people with disabilities and their income classes. The effectiveness of disability allowance and disability pension on reducing poverty rates is low since the percentages of beneficiaries of disability allowance or disability pension are very low. Disability allowance is more effective on reducing PGRs than disability pension because the percentage of the beneficiaries of disability allowance is much higher than that of disability pension, and because the beneficiaries of disability allowance are lower income classes than those of disability pension. Thus it can be said that disability allowance is better targeted on low income disabled people than disability pension. As a result, disability allowance is a better scheme for reducing poverty of disabled people. However, the percentage of the beneficiaries of disability allowance is still low since the beneficiaries are very limited to people with income below 120% of the absolute poverty line. Moreover, the benefit rates of disability allowance are very low. Therefore, disability allowance is not very effective on reducing poverty problems of disabled people. It is fundamental to expand beneficiaries of disability allowance and to raise its benefit rates in order to reduce disabled people's poverty.

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