Reconciling Work and Poverty Reduction: How Successful Are European Welfare States? (International Policy Exchange)

This book examines the link between poverty on the one hand and labour market participation and the distributive capacity of welfare states on the other hand. It focuses on the working-age population and the evolutions in Europe during the 'good economic years' before the financial crisis. The book provides social research in an accessible way. It introduces the reader into the various concepts of measuring poverty and exclusion and discusses data limitations. Obviously, we are not the first to observe worrying trends in poverty or inequality. The specific approach in this book may be summarized as follows. First, to gain a better understanding of the nexus of labour market participation, social redistribution and poverty, we focus on the distinction between work-poor and work-rich households. Second, we augment a traditional 'pre-post approach' of the impact of social transfers with regression analysis and policy indicators. Third, we refine the common method of measuring the redistributive effect of social expenditure, particularly for in-kind benefits . Fourth, we give due consideration to concepts and data. Most of the analyses are based on the European Statistics on Income and Living Conditions (SILC), but when relevant and feasible, we include alternative surveys (in the case of Germany, SILC and SOEP data) and additional data, i.e. administrative expenditure data and indicators that inform directly on policy. Finally, we discuss our observations with reference to the employment-centred welfare reforms that were prominent in European countries since the mid-1990s, and link the analysis with a broader perspective on the socio-economic, demographic and paradigmatic evolutions in contemporary welfare states. ## Abstract Since the beginning of the great recession, poverty has, not unexpectedly, increased in many Member States of the European Union. More worrying in view of its structural implications is the observation that in the years before the financial crisis, in most European countries poverty rates for the non-elderly population have stagnated or even increased, in spite of economic growth and rising employment. This suggests limitations that are inherent to employment-centred welfare reform and downward pressures on the redistributive capacity of welfare states. The book focuses on links between poverty trends, patterns of labour market participation and social redistribution. The analyses hinge upon the distribution of jobs over households, by distinguishing work-poor and work-rich households. With regard to the redistributive role of welfare states, the traditional ‘pre-post approach’ is augmented with regression analyses and indicators that reflect the impact of policies. The book also presents a refined method of measuring the redistributive effect of social expenditure, particularly for in-kind benefits. Due consideration is given to concepts, measurement and data: when relevant and feasible micro-simulation, alternative surveys and additional indicators are used. The empirical observations with reference to the impact of employment-centred welfare reforms on poverty are linked with a broader perspective on the socio-economic, demographic and paradigmatic evolutions in contemporary welfare states. The book highlights the importance of social redistribution per se and the necessity to study the impact of social spending on poverty. Disappointing poverty trends suggest limitations to employment-centred welfare reform and downward pressures on the redistributive capacity of welfare states. Innovative empirical analyses of the links between poverty, labour market participation and social redistribution are presented. The observations are linked with a broader perspective on the socio-economic, demographic and paradigmatic evolutions in contemporary welfare states