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The State and Poverty Alleviation in Advanced Capitalist Democracies

Author

Listed:
  • Francois Nielsen
  • David Bradley
  • John D. Stephens
  • Evelyne Huber
  • Stephanie Moller

Abstract

We analyze the impact of the state on the incidence of poverty in the working-age population of 14 advanced capitalist democracies between 1970 and 1997 using an unbalanced panel design. We utilize poverty measures based on micro-level data from the Luxembourg Income Study in conjunction with pooled time series data from the Huber, Ragin and Stephens (1997) database. We argue that economic factors including de-industrialization and unemployment largely explain pre-tax, pre-transfer poverty rates of the working age population in advanced capitalist states. These rates, however, are theoretical as advanced democracies redistribute resources through taxes and transfers. We show that the extent of redistribution (measured as poverty reduction via taxes and transfers) is explained directly by welfare state generosity as well as constitutional structure (number of veto points) and the strength of the left, both in unions and in government.

Suggested Citation

  • Francois Nielsen & David Bradley & John D. Stephens & Evelyne Huber & Stephanie Moller, 2001. "The State and Poverty Alleviation in Advanced Capitalist Democracies," LIS Working papers 278, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:278
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    References listed on IDEAS

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    1. Hwanjoon Kim, 2000. "Anti-Poverty Effectiveness of Taxes and Income Transfers in Welfare States," LIS Working papers 228, LIS Cross-National Data Center in Luxembourg.
    2. Beck, Nathaniel & Katz, Jonathan N., 1995. "What To Do (and Not to Do) with Time-Series Cross-Section Data," American Political Science Review, Cambridge University Press, vol. 89(3), pages 634-647, September.
    3. Timothy M. Smeeding, 1989. "Poverty, Affluence, and the Income Costs of Children: Cross-National Evidence from the Luxembourg Income Study (LIS)," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 11(2), pages 222-240, December.
    4. Iversen, Torben, 1998. "Wage Bargaining, Central Bank Independence, and the Real Effects of Money," International Organization, Cambridge University Press, vol. 52(3), pages 469-504, July.
    5. Joakim Palme & Walter Korpi, 1998. "The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality and Poverty in the Western Countries," LIS Working papers 174, LIS Cross-National Data Center in Luxembourg.
    6. Lane Kenworthy, 1998. "Do Social-Welfare Policies Reduce Poverty? A Cross-National Assessment," LIS Working papers 188, LIS Cross-National Data Center in Luxembourg.
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