“In Asia, unlike Western countries, the poverty rate among the elderly is not decreasing”

ATWhile poverty rates for the general population have fallen sharply in East Asia as a result of the remarkable economic development of recent decades, this is not the case for the elderly, contrary to the situation observed in the most Western countries at a comparable level of development. An international team of Korean, Japanese, Taiwanese and Chinese economists and sociologists investigated the causes of this gap (“What Makes Old-Age Poverty in East Asian Societies So High?” », Inhoe Ku, Wonjin Lee, Aya Abe, Zhu Mengbing, Li Shi, Chungyang Yeh, Dongjin Kim, LIS Working Paper Series nᵒ 842, 2022).

By convention, the authors set the poverty line at 50% of median disposable income to calculate relative poverty rates. China has the highest rate for the whole population (21%), Taiwan the lowest (10%), Japan and South Korea are in between (16.1% and 14.6% respectively). %). By way of comparison, these rates range in the West from 5.7% in Denmark to 16.7% in the United States.

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The results are significantly different for people aged over 65. The most remarkable case is that of South Korea, where the poverty rate in this category reaches 47.2%! The difference with the average rate (for the whole population) is also significant in Taiwan (26%) but more moderate in China (27%) and especially in Japan (19%). This gap is, on the other hand, non-existent or weak in Denmark, Finland, Germany or Italy, and a little higher in the United States. The only western exception is Australia, where this rate, 26.5%, is more than double the population average.

An indispensable global approach

Understanding these differences between Asian and Western countries requires adopting a global approach, because many factors are likely to affect these figures: socio-demographic variables (age, gender, education, proximity of the place of residence to the rest of the family), sources of income (work, including after retirement, intra-family transfers, social transfers), assets (holding financial assets or housing).

In order to study the weight of these determinants, the authors use comparable data for the year 2013 in the ten countries considered. Their results contradict certain received ideas.

First of all, the level of education of the elderly, lower on average than the rest of the population because of generational effects, contributes to their greater poverty, except in Japan, where the massification of education is older. Then, the fact of several generations living under the same roof – a phenomenon that is declining in Asia but still much more important than in Western countries – reduces poverty rates.

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