19 Poverty in the five welfare regimes of Europe

Abstract

Relative poverty within Europe is explored, making a distinction between five types of welfare regimes: Nordic, Central European, Liberal, Southern-European and Post-Socialist. A household is defined as poor if its equivalised disposable income is below 60 % of the national contemporary median income. The level of poverty is stable over time, which justifies looking at all three investigated years (2009, 2014 and 2019) together. Seven events (poverty determinants/risk factors) are analysed, including demographic and labour market factors. There are remarkable poverty risk differences between population sub-groups delimited by the seven determinants. Generally, in the Nordic and the Southern-European welfare states risk factors are less detrimental compared to particularly the Liberal welfare states. The largest excess poverty risk for female led households compared to male led is found in the Southern- European regime (5 % points). Similarly, the largest excess risks for respectively singles, low education families, students, the unemployed, permanently disabled, and pensioners, are respectively in the Southern-European (8 %points), Post-Socialist (16 % points), Nordic (11 % points), Liberal (26 % points), Continental (19 % points) and Liberal welfare (3 % points) regime. Identifying different avenues to reduce poverty, counter-factual simulations show which regimes have the largest potential of poverty reduction by closing the seven investigated poverty gaps. The poverty reduction potential is smallest in the Nordic welfare regime (6 % points) and largest in the Liberal regime (12 % points), reflecting the fact that the Nordic regime already has low inequality