Examining the effects of the Durunuri programme on low-wage workers' social insurance coverage in South Korea

Abstract

This study examined the effects of the Durunuri programme in Korea, a Making Work Pay policy initiated in 2012 that subsidises social insurance contributions of low-wage workers in workplaces with fewer than 10 employees. Using a nationally representative sample of Korean low-wage workers between the years 2010 and 2015, the study employs a difference-in-differences method to isolate the effect of the Durunuri programme on workers' subscription rate to the national pension and employment insurance programmes. Results indicated that, compared with ineligible low-wage workers in workplaces with 10 or more but fewer than 30 employees, eligible low-wage workers in workplaces with fewer than 10 employees were found to experience an increase in the odds of being subscribed to both the national pension and employment insurance programmes during the first, second and third year following implementation of the Durunuri programme. Policy implications as well as future policy modifications are further discussed.