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How do unemployment benefits and minimum wage affect poverty?

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  • Cristina Irina PARASCHIV

Abstract

The instruments used anti-poverty-wise by governments and authorities in a direct manner are restricted to the economic tools such as the minimum wage system or the unemployment benefits. Although these instruments have a beneficial effect in the majority of cases, the abuse or misuse of said mechanisms can and would generate the exact opposite effect on the poverty-stricken population. The beneficial effects account towards the reintegration of the populace within the labour market, by securing a form of household income and by protecting the under-paid employees against the risk of falling into poverty as well as abuse and exploitation. These instruments need to be updated to undertake the new intricacy of dimensions that compose poverty, as seen nowadays. An in depth analysis of the phenomenon and the ramifications of its effects and causes is required to come up with other ways and instruments to help lessen its outcomes, combined with a change in perspective and focus over the classical instruments towards a better welfare of the populace. This paper studied the correlation that might exist between the indicators that reflect the phenomenon of poverty and the instruments used by the government to decrease its incidence and intensity such as unemployment benefits (insurance or assistance) and the minimum wage within the EU 28 countries in a ten year timeframe (from 2006 to 2015).

Suggested Citation

  • Cristina Irina PARASCHIV, 2018. "How do unemployment benefits and minimum wage affect poverty?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 91-112.
    • Handle: RePEc:agr:journl:v:xxv:y:2018:i:special:p:91-112
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    References listed on IDEAS

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