The welfare regimes and relative poverty in the EU-14. 1995-2006

Abstract

This paper analyses the relationship between the welfare regimes and relative poverty in a balanced panel of 14 EU countries in the period from 1995 to 2006. We seek to understand how successful the welfare redistribution in reducing poverty is. More specifically, we investigate the extent to which the relative poverty rate is driven by the welfare state, economic, institutional and political variables. The results suggest that the female employment is the key to the sustainable of welfare regimes. When the level of employment of the poverty risk groups is high and levels of unemployment is low, more people contribute to the welfare state and the less draw on it, making any given level of redistribution more effective. Under these conditions, even the very generous Scandinavian welfare regime is sustainable. By contrast, where the employment level for poverty risk groups is low, as in the Mediterranean and some Continental welfare states, generous redistribution generates large budget deficits and thus creating a risk of retrenching the welfare state.