Means-tested COVID-19 stimulus payment and consumer spending: Evidence from card transaction data in South Korea

This study examines the effect of a means-tested COVID-19 stimulus payment, which was provided by the Seoul Metropolitan Government in South Korea, on consumer spending. The Seoul government issued a one-off payment in the spring of 2020 for residents in the city living below the national median income. We use daily card transaction data aggregated by users' age, income and location of residence, and apply a difference-in-differences approach to assess the effect of the stimulus payment. We compare consumption for the treatment (eligible for the payment) and control (ineligible but with a similar level of income) groups before and after the implementation of the payment. The results show that the payment increased consumer spending for the treatment group by about 12%. Recipients of the means-tested payment have a marginal propensity of consumption at no less than 59%, larger than that found for a universal emergency payment made by the Korean government and similar stimulus checks in other countries.