Do public pensions crowd out private transfers to the elderly?: evidence from South Korea

Abstract

We investigate the impact of receiving a public pension on total expenditures, food expenditures, and private transfers of the elderly in South Korea. Using a natural experiment that occurred in 1999, we are able to explore the impacts of a large public pension program expansion which newly incorporated people who had been self-employed, unemployed, and out of the labor force. We find that receipt of a public pension did not allow the elderly to increase total expenditures or food expenditures because the expansion of public pensions largely crowded out financial transfers from adult children and/or own siblings.