A Study on the Policy Simulation Using Welfare Accounts from the Perspective of SNA

Abstract

This study examines the significance of constructing welfare accounts which, while consistent with the System of National Accounts (SNA), can complement the limitations of the OECD Social Expenditure Statistics (SOCX) in analyzing the economic effects of welfare policies, and proposes a simulation method using such welfare accounts. The net effect of welfare expenditure by function on household income and distribution was analyzed through multiplier analysis of the ‘social account matrix’ (SAM) that reflects the income flow of the real economy. Since the welfare account that can identify administrative expenses as a policy vector was used, the net policy effect of welfare expenditure could be analyzed. The marginal propensity to consume was estimated by using data from the Household Financial Welfare Survey. Also, the consumption effect of welfare expenditure by household income decile was analyzed. Through the proposal of a simulation method using the welfare account, it is confirmed that the differences in welfare expenditure by function and the form of expenditure (such as cash, in kind, and administrative expenses) cause differences in income distribution and also affect the consumption welfare by income decile. It is expected that the simulation method proposed through this study will play a new role that has not been previously proposed before in finding appropriate welfare policies for each economic activity and household sector.