Improving poverty reduction in Europe: what works best where?

Publication type:

Journal Article

Authors

Chrysa Leventi, Holly Sutherland and Iva Valentinova Tasseva

Publication date

15 Feb 2019

Summary

This article examines how income poverty is affected by changes to the scale of tax-benefit policies and which are the most cost-effective policies in reducing poverty or limiting its increase in seven diverse EU countries. We do that by measuring the implications of increasing/reducing the scale of each policy instrument, using microsimulation methods while holding constant the policy design and national context. We consider commonly applied policy instruments with a direct effect on household income: child benefits, social assistance, income tax lower thresholds and a benchmark case of rescaling the whole tax-benefit system. We find that the assessment of the most cost-effective instrument may depend on the measure of poverty used and the direction and scale of the change. Nevertheless, our results indicate that the options that reduce poverty most cost-effectively in most countries are increasing child benefits and social assistance, while reducing the former is a particularly poverty-increasing way of making budgetary cuts.

Published in

Journal of European Social Policy

DOI

https://doi.org/10.1177/0958928718792130

Subjects

Households, Poverty, Public Policy, Welfare Benefits, Wages And Earnings, Microsimulation and Taxation