Caminada, Koen and Goudswaard, Kees (2008): Effectiveness of poverty reduction in the EU: A descriptive analysis. Published in: Department of Economics Research Memorandum No. 2008.06 (2008): pp. 1-51.
Download (348kB) | Preview
The European Union coordinates and encourages Member State actions to combat poverty, and to reform their social protection systems on the basis of policy exchanges and mutual learning (‘best practices’).
Some EU countries are more effective in poverty reduction than others. What can explain these variations in effectiveness? This paper analyses the effectiveness of welfare state policies and especially social transfers in EU-countries in alleviating poverty. To indicate whether European economic integration may have had any impact on poverty reduction, we also include several non-EU15 countries as a benchmark into our analysis. We analyze on a cross-country basis the relationship between poverty rates and social effort, as measured by social expenditure ratios. We also correct these expenditure ratios for the impact of the tax system and for private social arrangements, using OECD methodology. Next, we compare poverty rates at the levels of market and disposable incomes, that is before and after transfers, in order to analyze the effect of tax and transfer policies in reducing poverty, i.e. to determine the target efficiency of social transfers. We perform several tests with the most recent data (LIS, OECD SOCX, and Eurostat: ECHP/EU-SILC).
Our results are less clear cut than earlier findings. We still find a quite strong negative relationship between the level of social expenditure and poverty among OECD countries. However, for EU-countries this relationship is weaker and there are substantial differences within the EU15. After correcting for the impact of taxes and for private social arrangements, the linkage between social effort and poverty levels becomes even weaker. Also, we do not find a strong relationship between levels of social spending and antipoverty effects of social transfers and taxes. At the program level, family programs and child support alleviate poverty to a large extent.
|Item Type:||MPRA Paper|
|Original Title:||Effectiveness of poverty reduction in the EU: A descriptive analysis|
|Keywords:||poverty, welfare states, Lisbon objectives, social indicators|
|Subjects:||H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
H - Public Economics > H5 - National Government Expenditures and Related Policies > H53 - Government Expenditures and Welfare Programs
|Depositing User:||Koen Caminada|
|Date Deposited:||27. Jan 2010 00:38|
|Last Modified:||13. Feb 2013 12:20|
Adelantado, J., and E. Calderón Cuevas (2006), ‘Globalization and the welfare state: the same strategies for similar problems?’, Journal of European Social Policy, 16(4), pp. 374-386.
Adema, W. (2001), ‘Net Social Expenditure: 2nd edition’. Labour Market and Social Policy - Occasional Papers, No. 52, (Paris: OECD).
Adema, W. and Ledaique, M. (2005), ‘Net Social Expenditure, 2005 edition’, OECD Social, Employment and Migration Working Paper 29, Paris: OECD.
Atkinson, A.B. (1987), 'On the measurement of poverty', Econometrica 55 (4), pp. 749-764.
Atkinson, T. (2002), ‘Social Inclusion and the European Union’, Journal of Common Market Studies 40 (4), pp. 625-643.
Atkinson, A.B. (2003), 'Income Inequality in OECD Countries: Data and Explanations', CESifo Working Paper Series No. 881.
Atkinson, A.B., L. Rainwater, and T.M. Smeeding (1995), 'Income Distribution in OECD Countries: Evidence from the Luxembourg Income Study', OECD Social Policy Studies 18, Paris.
Atkinson, A.B., and A. Brandolini (2001), 'Promise and Pitfalls in the Use of Secondary Data-Sets: Income Inequality in OECD Countries as a Case Study', Journal of Economic Literature 39 (3) (September), pp. 771-800.
Atkinson, T., B. Cantillon, E. Marlier and B. Nolan (2002), Social Indicators. The EU and Social Inclusion, Oxford: University Press.
Bäckman, O. (2005), ‘Welfare states, social structure and the dynamics of poverty rates. A comparative study of 16 countries, 1980-2000’, Luxembourg Income Study Working Paper Series 408, Luxembourg.
Behrendt, Ch. (2000), ‘Is there income poverty in Western Europe? Methodological pitfalls in the measurement of poverty in a comparative perspective’, Luxembourg Income Study Working Paper Series 258, Luxembourg.
Behrendt, Ch. (2002), 'Holes in the safety net? Social security and the alleviation of poverty in a comparative perspective .', in: R. Sigg and Chr. Behrendt (eds.) Social Security in the Global Village, International Social Security Series, Volume 8, Transaction Publishers, New Brunswick / London, pp. 333-358 (also published as Luxembourg Income Study Working Paper Series 259, Luxembourg).
Bourguignon, F., and L. Pereira da Silva and N. Stern (2002), ‘Evaluating the Poverty Impact of Economic Policies: Some Analytical Challenges’, Stern - Washington DC: The World Bank (Mimeo), 2002.
Brady, D. (2004), ‘The welfare state and relative poverty in rich western democracies, 1967-1997’, Luxembourg Income Study Working Paper Series 390, Luxembourg.
Brandolini, A. (2006), ‘Measurement of income distribution in supranational entities: The case of the European Union’, Luxembourg Income Study Working Paper Series 452, Luxembourg.
Caminada, K. and Goudswaard, K.P. (2001), ‘International Trends in Income Inequality and Social Policy’, International Tax and Public Finance 8 (4), pp. 395-415.
Caminada, K. and Goudswaard, K.P. (2005), ‘Are Public and Private Social Expenditures Complementary?’, International Advances in Economic Research 11 (2), pp. 175-189.
Cantillon, B., I. Marx and K. Van den Bosch (2002), ‘The puzzle of egalitarianism: About the relationships between employment, wage inequality, social expenditures and poverty’, Luxembourg Income Study Working Paper Series 337, Luxembourg.
European Commission (2007), Joint Report on Social protection and social inclusion 2007. Social inclusion, pensions, healthcare and long term care, Luxembourg: Office for Official Publications of the European Communities.
European Commission (2008), Joint Report on Social protection and social inclusion 2008. Social inclusion, pensions, healthcare and long term care, Luxembourg: Office for Official Publications of the European Communities.
Eurostat (2005), ‘The continuity of indicators during the transition between ECHP and EU-SILC’, Working Paper and Studies, Eurostat.
Eurostat (2007), Structural Indicators EU - Social Cohesion, http://epp.eurostat.ec.europa.eu/ Förster, M. (1993), 'Comparing Poverty in 13 OECD Countries: Traditional and Synthetic Approaches,' Luxembourg Income Study Working Paper 100, Luxembourg.
Förster, M., and M. Pearson (2002), ‘Income distribution and poverty in the OECD area: trends and driving forces’, OECD Economic Studies, No. 34, 2002/1, OECD, Paris, pp. 7-39.
Förster, M., and M.M. d’Ercole (2005), ‘Income Distribution and Poverty in OECD Countries in the Second Half of the 1990s’, OECD Social, Employment and Migration Working Papers, no. 22.
Gottschalk, P., and T.M. Smeeding (1997), 'Cross-National Comparisons of Earnings and Income Inequality', Journal of Economic Literature 35 (June), pp. 633-687.
Gottschalk, P. and T.M. Smeeding (2000), 'Empirical Evidence on Income Inequality in Industrialized Countries', in: A.B. Atkinson and
Bourgignon, F. (eds), Handbook of Income Distribution, New York: Elsevier-North Holland Publishers, pp. 261-308.
Guio, A.-C. (2005), ‘Income poverty and social exclusion in the EU25’, Statistics in focus: population and social conditions, 13/2005, pp. 1-7.
Hagenaars, A., and K. de Vos (1987), ‘The definition and measurement of poverty’, The Journal of Human Resources 23 (2), pp. 211-221.
Jesuit, D., and V. Mahler (2004), ‘State redistribution in comparative perspective: A cross-national analysis of the developed countries’, Luxembourg Income Study Working Paper Series 392, Luxembourg.
Kakwani, N., and J. Silber (eds.) (2007), The Many Dimensions of Poverty, New York: Palgrave Macmillan.
Kakwani, N., and J. Silber (eds.) (2008), Quantitative Approaches to Multidimensional Poverty Measurement, New York: Palgrave Macmillan.
Kangas, O. and J. Palme (2000), 'Does Social Policy Matter? Poverty Cycles in OECD Countries', International Journal of Health Services 30(2), pp. 335-352.
Kenworthy, L. (1999), 'Do Social Welfare Policies Reduce Poverty? A Cross-National Assessment', Social Forces 77 (3), pp. 1119-1139.
Kim, H. (2000a), 'Anti-Poverty Effectiveness of Taxes and Income Transfers in Welfare States', International Social Security Review 53 (4) , pp. 105–129.
Kim, H. (2000b), ‘Do welfare states reduce poverty? A critical shortcoming in the standard analysis of the anti-poverty effect of welfare states’, Luxembourg Income Study Working Paper Series 233, Luxembourg.
Kühner, S. (2007), ‘Country-Level Comparisons of Welfare State Change Measures: Another Facet of the Dependent Variable Problem within the Comparative Analysis of the Welfare State?’, Journal of European Social Policy 17 (1), pp. 5-18.
Leibfried, S. (2002), ‘Some Background Comments on the Extension of the Open Method of Coordination’, Belgisch Tijdschrift voor Sociale Zekerheid 44 (3), pp. 473-479.
Mahler, V.A., and D.K. Jesuit (2006), ‘Fiscal Redistribution in the Developed Countries: New Insights from the Luxembourg Income Study’, Socio-Economic Review 4, pp. 483-511 (also published as Luxembourg Income Study Working Paper Series 392, Luxembourg).
Marcus, J. and S. Danziger (2000), 'Income Poverty in Advanced Countries', in: A.B. Atkinson, and Bourguignon, F. (eds.), Handbook of Income Distribution. New York: Elsevier-North Holland Publishers.
Musgrave, R.A., K.E. Case and H.B. Leonard, (1974), ‘The Distribution of Fiscal Burdens and Benefits’, Public Finance Quarterly 2 (July), pp. 259-311.
Nell, G. (2005), ‘Prosperity and the welfare state: The effect of benefit generosity and wage coordination on absolute poverty and prosperity in cross-national perspective’, Luxembourg Income Study Working Paper Series 424, Luxembourg.
OECD (2007), Social Expenditure Database 1980-2003 (www.oecd.org/els/social/expenditure); download January 4th, 2008.
OECD (2008), Growing unequal? Income distribution and Poverty in OECD Countries, Paris: OECD.
Pestieau, P. (2006), The Welfare State in the European Union: Economic and Social Perspectives, Oxford: Oxford University Press.
Sainsbury, D., and A. Morissens (2002), ‘European anti-poverty policies in the 1990s: Toward a common safety net’, Luxembourg Income Study Working Paper Series 307, Luxembourg.
Scruggs, L., and J.P. Allan (2006), ‘The Material Consequences of Welfare States: Benefit Generosity and Absolute Poverty in 16 OECD Countries’, Comparative Political Studies 39, pp. 880-904 (also published as Luxembourg Income Study Working Paper Series 409, Luxembourg).
Smeeding, T. (2005), ‘Poor people in rich nations: The United States in comparative perspective’, Luxembourg Income Study Working Paper Series 419, Luxembourg.
Smeeding, T., L. Rainwater, and G. Burtless (2000), 'United States Poverty in a Cross-National Context', Luxembourg Income Study Working Paper Series 244, Luxembourg.
Smolensky, E., W. Hoyt and S. Danziger (1987), ‘A Critical Survey of Efforts to Measure Budget Incidence’, in: H.M. van de Kar; B.L. Wolfe (eds.), The Relevance of Public Finance for Policy-Making, Proceedings IIFP Congress 1985, Detroit, pp. 165-179.
Wu, K. (2005), 'How Social Security Keeps Older Persons Out of Poverty across Developed Countries', Luxembourg Income Study Working Paper 410, Luxembourg.