Income Gap Reduction Effect↑... Will O Se-hoon's Anshim Income Gain Momentum?

Guaranteed Income Reduces Gini Coefficient by 7.0%
Seoul City "Will Actively Consult with Ministry of Health and Welfare and Seoul City Council"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] An analysis has shown that the 'Ansim Income' program, which provides differentiated support focusing on low-income groups, is more effective in reducing income inequality than basic income. Based on these research results, the promotion of Ansim Income by Seoul Mayor Oh Se-hoon is expected to gain momentum.

According to Seoul City and the Ministry of Health and Welfare on the 7th, Seoul City will officially launch the 'Seoul Ansim Income Pilot Project' starting next month. A Seoul City official explained, "We plan to actively coordinate not only with the Ministry of Health and Welfare but also with the Seoul Metropolitan Council."

The plan is to provide 50% of the shortfall from the median income in cash to households in the bottom 25% income bracket (below 50% of the standard median income). After analyzing the effects on 500 households, the scope will be expanded in the future. Experimental households will be selected through a public announcement in September, and payments will be made for three years from January next year to December 2024.

The required budget is 6.886 billion KRW, fully funded by the city. To maximize the purpose of selective welfare, Seoul City will also introduce a cutoff standard of 326 million KRW in net assets.

Ansim Income is an income compensation system that pays half of the difference between the median income and the income of households below the median income. Seoul City has reduced the target from the bottom 50% income group to the bottom 25% and will pay the difference in cash.

Ansim Income reduces income inequality... "Need to consider linking with EITC and unemployment benefits"

Professor Park Ki-sung of Sungshin Women's University analyzed in the report 'Costs and Economic Effects of the Ansim Income System' that implementing the Ansim Income system has the effect of reducing income inequality.

The report also viewed the income inequality reduction effect of the Ansim Income system as high. Comparing the cases of using the additional budget of 29.7437 trillion KRW required for implementing the Ansim Income system for basic income and expanding the current welfare system respectively, the Ansim Income system reduced the Gini coefficient of disposable income by 7.0%. The quintile ratio, which indicates the distribution level of national income, also decreased by 24.7%.

On the other hand, the basic income system reduced the Gini coefficient and quintile ratio by 1.2% and 3.7%, respectively, and expanding the current welfare system only reduced them by 2.2% and 4.5%.

Regarding this, Professor Sung Tae-yoon of Yonsei University's Department of Economics said, "Ansim Income focuses on low-income groups, so it is more effective than basic income and has less fiscal burden," but added, "However, if it is not linked with existing welfare policies such as the Earned Income Tax Credit (EITC) and unemployment benefits, duplication issues may arise."

Meanwhile, consultations with the Ministry of Health and Welfare and the Seoul Metropolitan Council remain before actual implementation. It has been confirmed that the Ministry of Health and Welfare has expressed the opinion that more time is needed to comprehensively review the consistency with existing welfare systems such as the National Basic Livelihood Security System.

This content was produced with the assistance of AI translation services.