Impact of social allowances on the elderly poverty in Taiwan, 2002–2008

Abstract

This article aims to examine both effectiveness and efficiency of social allowances in reducing elderly poverty in Taiwan. These aims are achieved by using a data set from the Survey of Family Income and Expenditure. This article shows that Taiwan's social allowance could reduce the poverty rate and poverty gap effectively. However, the substantial increase of social allowance spending over the 2002–2008 period does not have a strong effect on poverty rates. The findings suggest that the potential cost savings would accrue from a more effective means test of social allowance transfers.

Keywords:

• effectiveness
• efficiency
• elderly poverty
• social allowance
• Taiwan

Acknowledgements

The Centre for Survey Research of Academia Sinica is responsible for the data used in this study. The author appreciates the assistance in access to data provided by the institutes and individuals aforementioned. The views expressed herein are the author's own.

Notes

1. For example, Holliday (2000) argued for the existence of a productivist world of welfare regime in East Asia, where social policies are subordinate to economic goals.

2. For more information on the LIS data, please see Smeeding (2002).

3. According to Chanfreau and Burchardt (2008), a range of over 50 equivalence scales exists. One of the shortcoming of the OECD scale is that it does not distinguish between economies of scale, such as food expenditures (private needs) or heating expenditures (public needs), within a given household (Bellù and Liberati 2005). Thus, no claim is made here that the OECD equivalence scale is the best scale to use, but simply that it is a familiar scale.

4. However, we have to bear in mind that this method has not been without criticism. In particular, there have been concerns that the approach is based on debatable assumptions about measuring poverty before and after taxes and transfers (Brady et al. 2009). If those assumptions are biased, it may be unrealistic to simulate what poverty would be as if no welfare state existed.

5. Which factors can explain why some years are more efficient than others in reducing poverty rates? Basically, these variations may be due to a number of substantial factors, including variations in policies, as well as differing socio-economic and socio-demographic contexts (Behrendt 2000).