Trends of Poverty and Income Inequality in Cross-National Comparison

Comparative research of poverty, income inequality and the effectiveness of income transfer systems has flourished during the last two decades, largely owing to the contribution of the Luxembourg Income Study project. So far, however, the majority of comparative analyses have been based on a single year. For this paper we analyzed cross-national patterns of poverty and income inequality with a special emphasis on their stability. We studied trends of poverty and income inequality between 1980 and 1995 in nine countries representing three different ideal types of social policy. The differences in poverty across the countries studied corresponded with the respective models of social policy more clearly in the mid-1990s than they did 15 years earlier. Generally speaking, the poverty rate is slightly under 5% in the Nordic countries, around 7.5% in Central Europe, 10% in Canada, 12.5% in the UK, and as high as 17.5% in the USA. All the countries included in the analysis share the trend that the primary distribution - based on the market income - has become less equal than before. In each country, the proportion of population being able to gain subsistence from the market alone has decreased continuously. This trend is significantly more remarkable than the change in actual poverty, which means that the absolute poverty alleviating impact of the income redistribution systems became stronger in these countries during the period 1980-1995. The analysis of income inequality produced a basically similar picture of the differences across the countries and the models of social policy as the analysis of poverty did. In comparison to poverty, however, the change is generally speaking less extensive. The Nordic countries, in particular, have been capable of responding to the rise of the market income differences so that the income inequality for disposable incomes has practically not increased at all. Canada shows a parallel trend. The USA and, in particular, the UK represent the opposite development. We also analyzed trends of poverty in various population groups. It was found that by 1995 poverty had turned into a risk of young adults in all the countries studied. The poverty rate increased for the age group 18-30 years in all countries, while an opposite trend was observed among the elderly, in particular those aged over 65. Poverty rate among the elderly is nowadays below the average population-level rate in all the countries studied

Societal shifts and changed patterns of poverty

This paper uses data from the Luxembourg Income Study to analyse cross-national and cross-temporal poverty risks in eleven western countries. Our analyses are embedded in the tradition of welfare state research. Despite a hundred years of welfare state efforts, at the beginning of the 21st century the question of poverty is still highly relevant. It remains today Europe's most fundamental social problem. In the first empirical section we present the situation overall and show that poverty risks have tended to increase from the early 1980s to the present day. We also show that the cross-national variation is largely in line with what we would expect from the international discussion about welfare regimes. Furthermore we show that the proportion of the national population with a market income below the poverty threshold has increased in all countries and that the cross-national variation in market income poor is not apparently related to type of welfare state regime. Our analysis shows that the poverty increase chiefly can be explained by increased structural pressures rather than retrenchment of the redistributional systems. In the second empirical section we present a simulation analysis to test whether structural, i.e. compositional differences in age, family and labour market behaviour can account for the cross-national variation found. Our results demonstrate the increasing importance of household labour market attachment for alleviating poverty risks, as well as for explaining the cross-national variation in these risks. In this sense the low poverty rates in the Scandinavian countries are not only due to generous systems of social protection but also favourable socio-economic and demographic structures

Social Policy or Structure? Income Transfers, Socio-demographic Factors and Poverty in the Nordic Countries and in France

The paper compares poverty in Denmark, Finland, Norway, Sweden and France. We answer whether it is justifiable to talk about a unified Nordic model in terms of poverty and poverty alleviation. We have (1) descriptive/analytical and (2) methodological goals. (1) We pool the four Nordic countries into a single data set and compare France with this 'Scandinavia'. The results give strong evidence to the existence of the homogenous Scandinavian model in terms of incidence of poverty, poverty profiles, and the effectiveness of social policy. (2) The methodological objective is to change the world and simulate what would happen if France had the Scandinavian social structure - but its own social policy - and vice versa. Our re-weighting simulations show that the 'Scandinavization' of France would almost eradicate poverty in France. The 'Francofication' of Scandinavia would cause dramatic results in Scandinavia: the number of persons totally dependent on social transfers would increase, the effectiveness of transfer systems would decrease, and the poverty rate would rise near to the actual French figures. In sum, the huge differences in the French and Scandinavian poverty rates are not mainly explained by income transfer programs but differences in the family structure and in labor market behavior. But it is important to remember that these patterns are greatly affected by the institutional set-ups of the welfare states

Economic inequality and democratic political engagement

Since Aristotle, who observed that great economic inequality leads the wealthy to seek a share of power matching their share of resources and so to subvert democratic government, scholars of politics have theorized that the proper functioning of a democracy depends on a relatively equal distribution of economic resources. Inequality, though, has been rising in the nearly all of the world's rich and upper-middle-income democracies since the at least the mid-1980s, and in many countries this trend began in the early 1970s. Examining individual behavior in twenty-four countries at multiple points in time, this paper investigates whether increases in economic inequality have had a negative effect on the functioning of democracy, focusing specifically on citizens' political engagement. It finds that contexts of greater income inequality reduce interest in politics, views of government responsiveness, and participation in elections

Relative to what? Cross-national picture of European poverty measured by regional, national and European standards

The starting point in the paper is the relative concept of poverty. We will study how our picture of poverty will change if we accept a very relative concept of poverty. The first problem we encountered was the selection of the benchmark. A couple of alternative ways to conduct relativizations were selected. First, we applied the conventional poverty approach. The poor were those whose income remained below 60% of the national equivalent disposable income. Second, we collapsed European nations together into one data pool and calculated a common poverty line for the EU. This EU line was then applied in subsequent analyses. Thirdly, we decomposed nation states into smaller units representing the poorest and richest areas in respective countries. Data were compiled from the Luxembourg Income Study. If we apply the conventional nation-based ways of operationalizing poverty (poverty line 60% of median income) the poverty rate varies from 7,1% in Sweden to 20,5% in Italy. The shift to the common European poverty line will expand that gap. The variation is from 0,7% in Luxembourg to 43,1% in Spain. Numerically and methodologically the most interesting issues are revealed when we compare regional, national and EU level relativizations. Our exercise indicates that within-nation differences are sometimes more pronounced than differences between nations. Therefore, very often national means tend to obscure more than they reveal. The seriousness of the problem varies between groups of countries. In the egalitarian Nordic countries incomes between regions as well as between individuals are more evenly distributed and consequently, the national means are more representative for these countries. Moreover, the Scandinavian cluster is more or less robust against the mode of comparison. The low poverty rates in the Nordic countries do not essentially change even if we change from national to regional or cross-national poverty lines. The change in the method of relativization does not alter our understanding of Scandinavian poverty but it has a substantial impact upon our picture of the Mediterranean countries. The use of the European poverty line leads to two to three times higher poverty rates than analyses based on purely national data. Also, the regional variation in these countries is the widest. Therefore, conclusions based on national means may in some cases be severely misleading. The results also have some bearing for our use of purchasing power parities. In societies with large socio-economic and regional variation in income, and consequently in consumption capacities, purchasing power parities implicitly assuming homogenous consumption patterns over society may give a distorted picture of the price levels in a country in question. When it comes to the Central European countries, to some extent the same story as was told in the Scandinavian case is valid. The countries are not that sensitive to changes in the calibration of the measurement instruments. Also the results for the UK are pretty robust but the main difference between the UK and Central-Europe is that the poverty rate is about 10 percentage points higher in the former

Finnish Poverty: A Cross-National Comparison

The Finnish welfare state is examined in contrast to Sweden, and the public policy of the US and UK. Analyses presented provide strong evidence of the capability of the Nordic welfare model in the equitable alleviation of poverty among all sections of the populatio

Socialpolitik eller social struktur? Inkomsttransfereringar, socio-demografiska faktorer och fattigdom i Frankrike och de nordiska länderna

Social Policy or Social Structure? Income Transfers, Socio demographic Factors and Poverty in the Nordic Countries and in France The paper compares poverty in Denmark, Finland, Norway, Sweden and France. We have (1) descriptive/analytical and (2) methodological goals. (1) We pool the four Nordic countries into a single data set and compare France with this “Scandinavia”. The results give strong evidence to the existence of the homogenous Scandinavian model in terms of incidence of poverty, poverty profiles, and the effectiveness of social policy. (2) The methodological objective is to “change the world” and simulate what would happen if France had the Scandinavian social structure – but its own social policy – and vice versa. Our re-weighting simulations show that the results of the “Scandinavization” of France depend on the method of simulation. First, a static simulation, changing the socio-economic structure, but preserving the present median incomes and poverty lines as they are, would almost eradicate poverty in France. The „Francofication“ of Scandinavia would lead to dramatic results in Scandinavia: the number of persons totally dependent on social transfers would increase, the effectiveness of transfer systems would decrease, and the poverty rate would rise near to the actual French figures. Second, in dynamic simulation we also change poverty lines to correspond actual median income (in “Scandi-France” the median income would rise – because of increased female labor force participation – and in “Franco-Scandinavia” decrease – because of lower female employ-ment). In “Scandi-France” the poverty rate would decrease close to the present Scandinavian figures, but the poor would be richer that the poor actually are in France. In “Franco-Scandinavia” the extension of poverty would be about the same as nowadays but the poor would be worse-off than they now are. In sum, differences in the French and Scandinavian poverty rates are explained by the dynamic interplay between social security and structural variables. However, differences in the family structure and in labor market behavior seem to be more important explanatory factors: about 2/3 of differences between countries are explained by these structural factors, while 1/3 is explained by income transfer systems. However, it is important to remember that these background factors are greatly affected by the institutional set-ups of the welfare states