A Simulation Analysis of the Effects of Proposed Changes to the National Basic Livelihood Security System

Abstract

In this study, we simulate the effects of several key modifications currently proposed for the National Basic Livelihood Security system (NBLS), using data from the Household Finances and Living Conditions Survey (HFLCS). The simulation analysis indicates that these changes—reducing the discrepancy between the standard median income and the actual median income derived from the HFLCS, raising the eligibility ceilings for Livelihood Allowance, increasing the basic deduction on earned and business income, and easing asset criteria—broaden NBLS coverage and reduce poverty. However, raising the eligibility limit for the Housing Allowance has little effect on poverty reduction, as it works to the benefit primarily of low-income individuals who are not in absolute poverty. Further discussion is needed on rationalizing the standard median income, relaxing asset criteria, and redefining the roles of the Livelihood, Housing, and Education Allowances.