The political economy of social assistance and minimum income benefits: a comparative analysis across 26 OECD countries

Abstract

Social assistance benefit schemes are a peculiar type of welfare state program. As the electoral costs are relatively low, this program forms an obvious target for cost reduction in times of austerity. The aim of this study is to examine the determinants of the developments in social assistance benefits. We seek to make two contributions. First, this paper provides insight into the role of economic, political, and institutional determinants of the variation in social assistance benefits. Second, cross-national data on social expenditures and income replacement rates are available for several welfare state programs, but not for social assistance benefits. Presenting minimum income benefit replacement rates, this study analyzes the developments of social assistance benefits across 26 OECD countries over the past two decades. The analysis leads to the conclusion that budgetary pressure stemming from increased exposure to international trade and soaring levels of unemployment is associated with benefit cuts.