Holes in the Safety Net? Social Security and the Alleviation of Poverty in a Comparative Perspective

Abstract

This chapter explores the effectiveness of welfare states in alleviating poverty in a comparative perspective on the basis of household micro-data from the Luxembourg Income Study. It presents a short descriptive overview over poverty rates in highly developed welfare states. The chapter briefly summarizes the available evidence on the effectiveness of the welfare state in terms of poverty alleviation and the relationship between social spending and poverty rates. Using social expenditure as a proxy for welfare effort, the relationship between welfare state effort and outcomes in terms of poverty has been described in a fairly succinct way: “The bigger the welfare state the smaller is the poverty rate”. As the basic safety net of the welfare state, minimum income schemes play a decisive role for the alleviation of poverty. An alternative approach can help to contribute to the explanation of the incidence and the causes of poverty in industrialized welfare states.