Social assistance and minimum income benefits: Benefit levels, replacement rates and policies across 33 countries, 1990-2009

Wang, Jinxian and Van Vliet, Olaf (2014): Social assistance and minimum income benefits: Benefit levels, replacement rates and policies across 33 countries, 1990-2009.

Abstract

Until recently, social assistance has received relatively little attention in the comparative welfare state literature, which is remarkable given its central function in combating poverty and pursuing social inclusion. This paper explores the developments of social assistance and minimum income benefits across 14 Western European countries, 12 Central and Eastern European countries and 7 non-European countries over the period 1990-2009. First, an institutional analysis shows that eligibility conditions, work requirements and benefit sanctions vary considerably across countries. Second, relying on new indicators, our analysis shows that real benefit levels increased in most countries, whilst the net income replacement rates declined on average. This development seems to fit with a ‘making work pay’ agenda. A subsequent qualitative analysis of the policies underlying the quantitative measures indicates that the declining replacement rates do not result from benefit cuts but from relatively larger wage increases. In addition, our policy analysis indicates that work requirements and benefit sanctions have become more activating in many countries. Third, the data indicate that social assistance benefits diverged across EU and other OECD countries between 1990 and 2009. Finally, this paper seeks to make a methodological contribution to the ongoing debate on the ‘dependent variable problem’ in the welfare state literature by analysing to what extent changes in quantitative indicators reflect actual policy changes.

• Item Type: MPRA Paper
• Language: English
• Keywords: social assistance benefit replacement rates, welfare state reform, social inclusion, convergence, dependent variable problem
• Subjects: H - Public Economics > H5 - National Government Expenditures and Related Policies > H53 - Government Expenditures and Welfare Programs; H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I31 - General Welfare, Well-Being; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs

References

Abrahamson, P., and C. Wehner (2003), Pension Reforms in Denmark. Department of Sociology, University of Copenhagen, Copenhagen.

Adema, W. (2006), ‘Social Assistance Policy Development and the Provision of a Decent Level of Income in Selected OECD Countries’, OECD Social, Employment and Migration Working Papers no. 38.

Allan, J. P., and L. Scruggs (2004), ‘Political Partisanship and Welfare State Reform in Advanced Industrial Societies’, American Journal of Political Science 48(3): 496-512.

Bernnan, D. (2007), ‘Babies, Budgets, and Birthrates: Work/Family Policy in Australia 1996-2006’, Social Politics: International Studies in Gender, State & Society 14(1): 31-57.

Caminada, K. and K.P. Goudswaard (2001), ‘International Trends in Income Inequality and Social Policy’, International Tax and Public Finance 8(4): 395-415.

Caminada, K., K. P. Goudswaard, and O. van Vliet (2010), ‘Patterns of Welfare State Indicators in the EU: Is There Convergence?’, Journal of Common Market Studies 48(3): 529-556.

Cantillon, B. (2011), ‘The Paradox of the Social Investment State: Growth, Employment and Poverty in the Lisbon Era’, Journal of European Social Policy 21(5): 432–449.

Clasen, J., and N. A. Siegel (2007), ‘Comparative Welfare State Analysis and the ‘Dependent Variable ’’, in J. Clasen and N. Siegel (eds), Investigating Welfare State Change: The ‘Dependent Variable’ Problem in Comparative Analysis. Cheltenham, UK: Edward Elgar: 3-12.

Cox., R. H. (1998), ‘From Safety Net to Trampoline: Labour Market Activation in the Netherlands and Denmark’, Governance 11(4): 397-414.

Daly, M., and N. Yeates (2003), ‘Common Origins, Different Paths: Adaptation and Change in Social Security in Britain and Ireland’, Policy & Politics 31(1): 85-97.

Danforth, B. and J.D. Stephens (2013), ‘Measuring social citizenship: achievements and future challenges’, Journal of European Public Policy 20(9): 1285-1298.

Dolowitz, D.P. and D. Marsh (2000), ‘Learning from abroad: The role of policy transfer in contemporary policy-making’, Governance 13(1): 5-24.

Eardley, T., J. Bradshaw, J. Ditch, I. Gough, and P. Whiteford (1996), Social Assistance in OECD Countries, Volume 1: Synthesis Report. Department of Social Security, London: HMSO: Research Report no. 47.

Eleveld, A., and O. van Vliet (2013), ‘The Dutch welfare state: Recent reforms in social security and labour law’, Diritto Pubblico Comparato ed Europeo 4: 1371-1399.

Esping-Andersen, G. (1990), The Three Worlds of Welfare Capitalism. Princeton: Princeton University Press.

European Commission (2009), Mutual Information System on Social Protection (MISSOC) Comparative Tables. Brussels.

European Commission (2010), The European Platform against Poverty and Social Exclusion: A European framework for social and territorial cohesion. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, COM(2010) 758 final, 16 December 2010, Brussels.

European Commission (2013), Development and Cooperation-EuropeAid, Brussels.

European Commission (2014), Labour Market Reforms Dataset (LABREF), Brussels.

European Commission (2014), Exchange Rates Database, Brussels.

European Council (1992), Council Recommendation on Common Criteria Concerning Sufficient Resources and Social Assistance in Social Protection Systems: 246-248.

Figari, F., M. Matsaganis, and H. Sutherland (2013), ‘Are European Social Safety Nets Tight Enough? Coverage and Adequacy of Minimum Income Schemes in 14 EU Countries’, International Journal of Social Welfare 22(1): 3-14.

Gabel, T., J. Clemens, and S. LeRoy (2004), Welfare Reform in Ontario: A Report Card. Fraser Institute Digital Publication.

Green-Pedersen, C., K. van Kersbergen, and A. Hemerijck (2001), ‘Neo-Liberalism, the ‘Third Way’or What? Recent Social Democratic Welfare Policies in Denmark and the Netherlands’, Journal of European Public Policy 8(2): 307-325.

Gregg, P., J. Waldfogel, and E. Washbrook (2006), ‘Family Expenditures Post-Welfare Reform in the UK: Are Low-Income Families Starting to Catch Up?’, Labour Economics 13(6): 721-746.

Heidenreich, M. and J. Zeitlin, J. (eds.) (2009) Changing European Employment and Welfare Regimes: The Influence of the Open Method of Coordination on National Reforms. London: Routledge.

Heston, A., R. Summers, and B. Aten. (2012), Penn World Table Version 7.1. Pennsylvania: University of Pennsylvania.

Hicks, A. and K. Freeman (2009), ‘Pension income replacement: permanent and transitory determinants’, Journal of European Public Policy 16(1): 127-143.

Holsch, K., and M. Kraus (2006), ‘European Schemes of Social Assistance: An Empirical Analysis of Set-ups and Distributive Impacts’, International Journal of Social Welfare 15(1): 50-62.

Immervoll, H. (2009), ‘Minimum-income Benefits in OECD countries: Policy Design, Effectiveness and Challenges’, IZA Discussion Papers no. 4627.

Korpi, W., and J. Palme (2003), ‘New Politics and Class Politics in the Context of Austerity and Globalization: Welfare State Regress in 18 Countries, 1975-95’, The American Political Science Review 97(3): 425-446.

Marx, I., S. Marchal, and B. Nolan (2012), ‘Mind the Gap: Net Incomes of Minimum Wage Workers in the EU and the US’, IZA Discussion Paper no. 6510.

Marx, I., and K. Nelson (2012), Minimum Income Protection in Flux. Basingstoke: Palgrave Macmillan.

Marchal, S., I. Marx, and N. Van Mechelen (2011), ‘Do Europe’s Minimum Income Schemes Provide Adequate Shelter against the Economic Crisis and How, If at All, Have Governments Respond?’, IZA Discussion Paper no. 6264.

Matsagains, M., H. Levy, and M. Flevotomou (2010), ‘Non-Take Up of Social Benefits in Greece and Spain’, Social Policy & Administration 44(7): 827-844.

Nelson, K. (2008), ‘Minimum Income Protection and European Integration: Trends and Levels of Minimum Benefits in Comparative Perspective, 1990-2005’, International Journal of Health Services 38(1): 103-124.

Nelson, K. (2010), ‘Social Assistance and Minimum Income Benefits in Old and New EU Democracies’, International Journal of Social Welfare 19(4): 367-378.

Nelson, K. (2013), ‘Social Assistance and EU Poverty Thresholds 1990-2008. Are European Welfare Systems Providing Just and Fair Protection Against Low Income?’, European Sociological Review 29(2): 386-401.

New Zealand Ministry of Social Development (2014), Social Assistance Chronology 1844-2014. Thorndon.

Olaskoaga, J., R. Alaez-Aller, and P. Diaz-De-Basurto-Uraga (2013), ‘Beyond Welfare Effort in the Measuring of Welfare States’, Journal of Comparative Policy Analysis: Research and Practice 15(3): 274-287.

OECD (2001-2011), Benefits and Wages: Country Specific Information 2001-2011. Paris: OECD.

Paetzold, J., and O. van Vliet (2014), ‘EU Coordination and the Convergence of Domestic Unemployment Protection Schemes’, Journal of Common Market Studies 52(5): 1070-1089.

Pallage, S., L. Scruggs, and C. Zimmermann (2013), ‘Measuring Unemployment Insurance Generosity’, Political Analysis 21(4): 524-549.

Pellizzari, M. (2006), ‘Unemployment Duration and the Interactions between Unemployment Insurance and Social Assistance’, Labour Economics 13(6): 773-798.

Rodrik, D. (2011), The Globalization Paradox: Why Global Markets, States, and Democracy Can’t Coexist. Oxford: Oxford University Press.

Saunders, P. (1995), ‘Improving Work Incentives in a Means-Tested Welfare System: The 1994 Australian Society Security Reforms’, Fiscal Studies 16(2): 45-70.

Scruggs, L. (2005), Welfare State Entitlement Data Set: a Comparative Institutional Analysis of Eighteen Welfare States. Version 1.1.

SSA (2014), Social Security Programs Throughout the World. Baltimore: SSA.

Starke, P. (2006), ‘The Politics of Welfare State Retrenchment: A literature Review’, Social Policy & Administration 40(1): 104-120.

Swank, D. (2002), ‘Global Capital, Political Institutions, and Policy Change in Developed Welfare States.’ Cambridge: Cambridge University Press.

Van Mechelen, N., and S. Marchal (2012), ‘Struggle for Life: Social Assistance Benefits, 1992-2009’, in Marx, I. and K. Nelson (eds), Minimum Income Protection in Flux. Basingstoke: Palgrave Macmillan: 28-53.

Van Mechelen, N., S. Marchal, T. Goedeme, I. Marx, and B. Cantillon (2011), ‘The CSB-Minimum Income Protection Indicators Dataset (CSB-MIPI)’, CSB Working Paper no. 11/05.

Van Oorschot, W. (2013), ‘Comparative Welfare State Analysis with Survey-Based Benefit Recipiency Data: The ‘Dependent Variable Problem’ Revisited’, European Journal of Social Security 15(3): 224-248.

Van Vliet, O. (2010), ‘Divergence within Convergence: Europeanization of Social and Labour Market Policies’, Journal of European Integration 32(3): 269-290.

Van Vliet, O. (2011), Convergence and Europeanisation: The Political Economy of Social and Labour Market Policies. Leiden: Leiden University Press.

Van Vliet, O., and K. Caminada (2012), ‘Unemployment Replacement Rates Dataset among 34 Welfare States 1971-2009: An Update, Extension and Modification of Scruggs’ Welfare State Entitlements Data Set’, NEUJOBS Special Report no. 2.

Van Vliet, O., K. Caminada and K. Goudswaard (2012), ‘The Political Economy of Labour Market Policies in Western and Eastern European Countries’, NEUJOBS Working Paper D6.3.

Vandenbroucke, F., and K. Vleminckx (2011), ‘Disappointing Poverty Trends: Is the Social Investment State to Blame?’, Journal of European Social Policy 21(5): 450-471.

Veit-Wilson, J. (1998), Setting Adequacy Standards. How Governments Define Minimum Incomes. Bristol: The Policy Press.

Venn, D. (2012), ‘Eligibility Criteria for Unemployment Benefits: Quantitative Indicators for OECD and EU Countries’, OECD Social, Employment and Migration Working Papers no. 131.

Whiteford, P. (1995), ‘The Use of Replacement Rates in International Comparisons of Benefit Systems’, International Social Security Review 48(2): 3-30.

World Bank (2012), World Development Indicators. Washington.