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The importance of income-tested benefits in good times and bad: lessons from EU countries

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  • Chrysa Leventi
  • Olga Rastrigina
  • Holly Sutherland

Abstract

Policy over the past years has seen a gradual movement away from universal social benefits towards the provision of more targeted benefit schemes. Using the European tax-benefit microsimulation model EUROMOD, this paper aims to compare the effectiveness of income-tested benefits at different points in the economic cycle. This objective is considered in terms of coverage of households with incomes falling below various thresholds and importance in terms of the fraction of total resources that these benefits provide. The prevalence and relative weight of income-tested benefits throughout the income distribution is also examined. We compare the situation in 2009 with that in 2014 (or 2013) for fifteen EU Member States experiencing differing economic conditions over the period in question, including those which have been affected comparatively little by the crisis as well as those which have witnessed severe reductions in economic activity and employment levels and those in strong recovery by 2014. As EU-SILC micro-data containing household income for 2013 or 2014 are not available yet, standard EUROMOD routines are enhanced with additional adjustments to the EU-SILC based input data in order to take into account changes in the labour market. We attempt to indicate the sensitivity of the estimated indicators to these particular changes. We conclude by discussing the methodological pitfalls and main findings of this research.

Suggested Citation

  • Chrysa Leventi & Olga Rastrigina & Holly Sutherland, 2016. "The importance of income-tested benefits in good times and bad: lessons from EU countries," ImPRovE Working Papers 16/01, Herman Deleeck Centre for Social Policy, University of Antwerp.
  • Handle: RePEc:hdl:improv:1601
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    References listed on IDEAS

    as
    1. Dolls, Mathias & Fuest, Clemens & Peichl, Andreas, 2012. "Automatic stabilizers and economic crisis: US vs. Europe," Journal of Public Economics, Elsevier, vol. 96(3), pages 279-294.
    2. Marx, Ive & Salanauskaite, Lina & Verbist, Gerlinde, 2013. "The Paradox of Redistribution Revisited: And That It May Rest in Peace?," IZA Discussion Papers 7414, Institute for the Study of Labor (IZA).
    3. Holly Sutherland & Francesco Figari, 2013. "EUROMOD: the European Union tax-benefit microsimulation model," International Journal of Microsimulation, International Microsimulation Association, vol. 1(6), pages 4-26.
    4. Figari, Francesco & Paulus, Alari & Sutherland, Holly, 2014. "Microsimulation and policy analysis," ISER Working Paper Series 2014-23, Institute for Social and Economic Research.
    5. Ive Marx & Lina Salanauskaite & Gerlinde Verbist, 2013. "GINI DP 82: The paradox of redistribution revisited: and that it may rest in peace?," GINI Discussion Papers 82, AIAS, Amsterdam Institute for Advanced Labour Studies.
    6. Geranda Notten, 2016. "How Poverty Indicators Confound Poverty Reduction Evaluations: The Targeting Performance of Income Transfers in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(3), pages 1039-1056, July.
    7. Jekaterina Navicke & Olga Rastrigina & Holly Sutherland, 2014. "Nowcasting Indicators of Poverty Risk in the European Union: A Microsimulation Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 119(1), pages 101-119, October.
    8. Bradshaw, Jonathan, 2012. "The case for family benefits," Children and Youth Services Review, Elsevier, vol. 34(3), pages 590-596.
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    More about this item

    Keywords

    income-tested benefits; coverage; economic cycle; European Union; microsimulation;

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • D3 - Microeconomics - - Distribution

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