Is it Actually Working Well? A Comparative Study of the Redistributive Effectiveness of Public Social Benefits in 33 Countries

This study applies the Commitment to Equity (CEQ) framework to analyze the redistributive effectiveness of public social benefits across 33 countries using data from the Luxembourg Income Study (LIS). The findings reveal that public social benefits significantly enhance the incomes of low-income groups with minimal effects on high-income groups, thereby reducing inequality, although the extent varies across nations. Cross-country differences in redistributive effect, impact effectiveness, spending effectiveness, and benefits rate enable the classification of countries into six distinct clusters. Progressivity deviation is identified as the main constraint on redistributive effectiveness, with income reranking also contributing to this limitation. Although many countries exceed optimal benefit coverage, some eligible populations remain underserved, indicating issues in targeting accuracy. Social benefits substantially reduce inequality, particularly for low-income groups, but may also introduce reranking effects. The analysis shows that redistributive effectiveness and benefits rate are positively associated with inequality reduction, while economic development, benefit levels, the working-age population proportion, and initial Gini coefficients positively influence redistributive effectiveness. Conversely, employment rates among the working-age population negatively impact redistributive effectiveness. Enhancing redistributive effectiveness requires improving targeting accuracy, advancing progressivity, and reducing reranking effects, although reliance solely on means-tested programs may not always be appropriate.