Social spending (in)efficiency of the European welfare regimes in reducing poverty

Abstract

Taking the example of social spending in EU-15 countries, in the period from 1995 to 2006, this article demonstrates how European welfare regimes can be reformed in order to improve results in reducing poverty. The analysis is based on non-parametric Data Envelopment Analysis (DEA) method Results show that countries with the highest social spending are not necessarily those with the lowest poverty rate as well as the countries that allocate the fewest resources are not necessary those with the highest poverty rate. In order to understand why some countries might need more resources than others to achieve similar poverty outcomes, the paper offers a qualitative analysis based on economic theory and empirical findings. © Vilnius University, 2002-2010.