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Stemming the tide. What have EU countries done to support low-wage workers in an era of downward wage pressure?

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Listed:
  • Sarah Marchal
  • Ive Marx

Abstract

Governments across the EU have been striving to get more people into work while at the same time acknowledging that more needs to be done to ‘make work pay’. Yet this drive comes at a time when structural economic shifts are putting pressure on wages, especially of less skilled workers. This article focuses on trends in minimum wages, income taxes, and work-related benefits within a selection of 16 EU countries, for the period 2001-2012, with three US states included as reference cases. We find evidence for eroding relative minimum wages in various EU countries, yet combined with catch-up growth in the new Member States. We also find that governments counteracted eroding minimum wages through direct income support measures, especially for lone parents. Most prevalent among these were substantial declines in income tax liabilities. More generally we see a trend unfolding towards a fiscalization of income support policies.

Suggested Citation

  • Sarah Marchal & Ive Marx, 2015. "Stemming the tide. What have EU countries done to support low-wage workers in an era of downward wage pressure?," ImPRovE Working Papers 15/18, Herman Deleeck Centre for Social Policy, University of Antwerp.
    • Handle: RePEc:hdl:improv:1518
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Dieter Vandelannoote & Gerlinde Verbist, 2017. "The Impact of In-Work Benefits on Employment and Poverty," Working Papers 1702, Herman Deleeck Centre for Social Policy, University of Antwerp.
    2. Bea Cantillon & Sarah Marchal & Chris Luigjes, 2017. "Decent Incomes for the Poor: Which Role for Europe?," Journal of Common Market Studies, Wiley Blackwell, vol. 55(2), pages 240-256, March.
    3. Bea Cantillon & Sarah Marchal & Chris Luigjes, 2015. "Decent incomes for the poor: which role for Europe?," ImPRovE Working Papers 15/20, Herman Deleeck Centre for Social Policy, University of Antwerp.
    4. Tine Hufkens & Linde Buysse & Natascha Van Mechelen & Gerlinde Verbist, 2017. "Fit for the labour market? An effort to reduce inactivity traps in the transition from benefit to work in the Belgian sickness and disability system," Working Papers 1711, Herman Deleeck Centre for Social Policy, University of Antwerp.
    5. Carlos Vacas-Soriano & Enrique Fernández-Macías & Rafael Muñoz de Bustillo, 2020. "Recent trends in wage inequality from an EU perspective: a tale of two convergences," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(3), pages 523-542, August.
    6. Rense Nieuwenhuis & Wim Lancker & Diego Collado & Bea Cantillon, 2020. "Trends in Women’s Employment and Poverty Rates in OECD Countries: A Kitagawa–Blinder–Oaxaca Decomposition," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(1), pages 37-61, March.
    7. Chrysa Leventi & Holly Sutherland & Iva Valentinova Tasseva, 2016. "Improving poverty reduction in Europe: what works (best) where?," ImPRovE Working Papers 16/16, Herman Deleeck Centre for Social Policy, University of Antwerp.
    8. Dieter Vandelannoote & Gerlinde Verbist, 2016. "The design of in-work benefits: how to boost employment and combat poverty in Belgium," ImPRovE Working Papers 16/15, Herman Deleeck Centre for Social Policy, University of Antwerp.
    9. Zachary Parolin, 2016. "The Sum of Its Parts? Assessing Variation and Trends in Family Income Support Across the 48 Contiguous United States," Working Papers 1605, Herman Deleeck Centre for Social Policy, University of Antwerp.
    10. Sarah Marchal & Wim Van Lancker, 2018. "The measurement of targeting intentions in complex welfare states: a proposal and empirical applications," Working Papers 1801, Herman Deleeck Centre for Social Policy, University of Antwerp.
    11. Kenworthy, Lane & Marx, Ive, 2017. "In-Work Poverty in the United States," IZA Discussion Papers 10638, Institute of Labor Economics (IZA).
    12. Sarah Marchal & Linus Sióland, 2019. "A safety net that holds? Tracking minimum income protection adequacy for the elderly, the working and the non-working of active age," Working Papers 1909, Herman Deleeck Centre for Social Policy, University of Antwerp.

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    More about this item

    Keywords

    social policy; in-work benefits; minimum wages;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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