The Impacts of Old Age Allowance on Beneficiaries' Consumption

By I-Ting Lu.

Published by The International Journal of Aging and Society

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Article: Electronic $US5.00

Consumption can be used as a welfare indicator. Quantifying the consumption effect of social welfare polices is of great importance to our understanding of the impacts of social welfare policies on households and the effectiveness of these policies. Based on these reasons, consumption offers opportunities to examine the impact of the Old Age Allowance, a social assistance program in Taiwan, on low-income households and further to evaluate the effectiveness of this policy. The Old Age Allowance (OAA) program, designed to provide income benefits to low income elders, has become an important issue in Taiwan, due to the aging population and the diminishing joint-family system. Understanding the OAA beneficiaries' behavior on consumption is of great importance for Taiwan as it has already taken steps to develop the government-funded program for the low-income elderly. To our knowledge, there is a lack of empirical evidence from Taiwan regarding the consumption effects of the public transfer in the form of OAA. In short, the goal of this research is to examine the consumption of the allowance beneficiaries, before and after the 1993 introduction of Old Age Allowance. The key question is when an elderly person living in the low-income household received this allowance, by how much will his or her household consumption decline or rise? Beside the total household consumption, we also give special attention to how the consumption on food, living, health, and leisure of the beneficiaries may alter after the implementation of this policy. This research has implications, especially as policy-makers consider various proposals to highlight an improvement in elders' income security.

Keywords: Old Age Allowance, Consumption, Beneficiary

The International Journal of Aging and Society, Volume 4, Issue 2, January 2015, pp.1-9. Article: Print (Spiral Bound). Article: Electronic (PDF File; 525.648KB).

I-Ting Lu

Assistant Professor, Department of Banking and Finance, Tamkang University, Taipei, Taiwan