Redistributive Effect of a New Housing Subsidy in Korea

Background/Objectives: Our study examines how the redistributive effect changes from a housing subsidy under the national basic life security law to a new act on housing benefit. Methods/Statistical Analysis: We use the 6th wave of National Survey of Tax and Benefit panel data and measure the redistributive effect by comparing the pre-tax and the post-tax Gini coefficient. Findings: Gini coefficient from a housing subsidy specified in the national basic life security law is 0.48260130, with a difference of 0.00594819, implying an improvement in income inequality. Also, Gini coefficient in the case of the market income with the housing subsidy under a new housing subsidy law is 0.48087697, and this is lower than that based on the market income by 0.00767252. Application/Improvements: Our results show that the new law has improved income inequality by 0.00172433, implying that the government policy can be successful.