Minimum Income Benefits Research Articles

Shifts at the margin of European welfare states: How important is food aid in complementing inadequate minimum incomes?

In recent decades, disappointing poverty trends and welfare state limitations in many European countries – including constraints on minimum income benefits – have paved the way for a larger role of the third sector. An interesting but controversial form of third-sector in-kind support is food aid provision. In Europe, food aid is, so far, a non-rights-based practice displaying worrisome discretionary and stigmatizing characteristics. Yet, the phenomenon of food aid in Europe has spread, professionalized, and penetrated the institutions of the welfare state. This raises the question if, how and to what extent food aid plays a role in bypassing structural constraints on minimum income protection. This article applies an exploratory case study approach to estimate the monetary value of food aid in relation to statutory minimum incomes in four EU-countries. We use cross-nationally comparable food reference budgets to price food aid packages in Belgium, Finland, Hungary and Spain. The results show that food aid, although not sufficient to close the at-risk-of-poverty gap, is non-trivial for some European households. In Spain and Belgium food aid packages can reach up to €100 a month (expressing 7% to 11% of respective minimum income benefit levels). Importantly, we perceive (formalized) cooperation and interaction between local welfare agencies and food charities in all countries, suggesting that welfare state actors use non-rights-based food aid for filling gaps in the social safety net. The large between- and within-country variation of the monetary values of food aid packages points, however, to food aid as a problematic discretionary practice.

Could the impact of a public policy help us evaluate the changes that have been implemented? An analysis of non-take-up of Spanish minimum income benefits

Could the impact of a public policy help us evaluate the changes that have been implemented? An analysis of non-take-up of Spanish minimum income benefits

Spatial Modeling and Analysis of the Determinants of Property Crime in Portugal

Many researchers have unraveled innovative ways of examining geographic information to better understand the determinants of crime, thus contributing to an improved understanding of the phenomenon. Property crimes represent more than half of the crimes reported in Portugal. This study investigates the spatial distribution of crimes against property in mainland Portugal with the primary goal of determining which demographic and socioeconomic factors may be associated with crime incidence in each municipality. For this purpose, Geographic Information System (GIS) tools were used to analyze spatial patterns, and different Poisson-based regression models were investigated, namely global models, local Geographically Weighted Poisson Regression (GWPR) models, and semi-parametric GWPR models. The GWPR model with eight independent variables outperformed the others. Its independent variables were the young resident population, retention and dropout rates in basic education, gross enrollment rate, conventional dwellings, Guaranteed Minimum Income and Social Integration Benefit, purchasing power per capita, unemployment rate, and foreign population. The model presents a better fit in the metropolitan areas of Lisbon and Porto and their neighboring municipalities. The association of each independent variable with crime varies significantly across municipalities. Consequently, these particularities should be considered in the design of policies to reduce the rate of property crimes.

Different Methods, Different Standards? A Comparison of Two Finnish Reference Budgets

According to Principle 14 of the European Pillar of Social Rights, everyone should have the right to adequate minimum income benefits that ensure a life in dignity. Reference budgets have been proposed to monitor this principle. Reference budgets are priced baskets of goods and services that represent a given living standard. At the moment, no common methodology for constructing reference budgets exists; instead, different methods are used to construct them. This study sought to compare the approaches and results of two Finnish reference budgets: one created by the Centre for Consumer Society Research (CCSR), and the second by the ImPRovE project. The purpose of the article is to respond to a gap in existing literature around how different methods for constructing reference budgets impact their outcomes. The two reference budgets offer a strong basis for comparison because they both sought to capture the same living standard in the same context for similar household types (single woman, single man, heterosexual couple, and heterosexual couple with two children), while using different approaches. The results suggest that the two reference budgets arrive at different estimates of what is needed for social participation. Ultimately, we found that the most significant differences between the budgets were housing and mobility costs for the couple with two children due to differences in information bases, selection criteria, evaluators, and pricing. The study makes a significant contribution to the literature because it is one of the first to explore how different approaches to constructing reference budgets affect their outcomes. The results suggest that clear criteria for constructing reference budgets are needed to monitor Principle 14 of the European Pillar of Social Rights.

The Benefit non-take-up in the Context of Cash Social Assistance Reform in Lithuania

The purpose of this article is to present the results of cash social assistance (CSA) benefit non-take-up in the context of the CSA system reform in Lithuania. The right to adequate minimum income benefits is one of the 20 key principles under the European Pillar of Social Rights (EPSR). Using the tax-benefit microsimulation model EUROMOD we seek to identify all those eligible to CSA benefit and to analyse its non-take-up rates in Lithuania. The analysis for 2016 showed that CSA benefit non-take-up in Lithuania was around 22%. This means that around one fifth of those who are entitled to this benefit do not get it for various reasons. The results show that there are two types of households, with a non-take-up rate exceeding 30%: single person and lone parent households. The dynamics of CSA benefit non-take-up between 2007-2016 were strongly negatively correlated to the annual average number of recipients of the CSA benefit. This makes for a counter-cyclical dynamic of the CSA non-take-up relative to the economic growth cycle. We find some evidence of an increase in the CSA non-take-up rate following the recent CSA reform in Lithuania. Further analysis is needed to distinguish between the effects of the economic cycle and the CSA reform.

The political economy of minimum income benefits: How parties, unions and migration influence benefit adequacy

How we treat the people most in need of support is a good indicator of the state of our societies. But we lack empirical evidence on how political parties affect minimum income benefits. The classic partisan difference theory leads us to expect opposite effects of governing right and left parties on benefit levels. The analysis of 16 OECD countries over the period of 1990 to 2009 shows that this hypothesis must be rejected as – if anything – right and left parties are associated with cuts. The inconsistent party effects point towards ‘new politics’ of blame avoidance strategies. A novel approach in the field of minimum income benefits is the analysis of the context of partisanship: how do unions and migration alter governments’ effects on benefits? The effect of migration on parties cannot be captured using the net migration rate; in the future we should look at how public opinion on migration influences policies. In line with the power resources approach, trade unions show a consistently strong association with higher benefits, but they cannot constrain right nor left parties in cutting benefits. The findings confirm that the politics of new social policies differ from the politics of old ones: (1) new politics are at work, (2) signs of negotiated retrenchment between unions and right governments are not robust and (3) no evidence of coalition building between left parties and unions was found.

The effectiveness of minimum income benefits in poverty reduction in Spain

One of the greatest peculiarities of the Spanish system of minimum income benefits is its complex organisation. There is a wide variety of specific means‐tested benefits whose management and financing depend on the central government. They are designed to protect different contingencies, providing very different levels of protection. On the other hand, the general risk of poverty is covered by regional governments without any coordination and financing from the central government. In this article, we provide a picture of the possibilities and limits of the current set of welfare benefits, focusing especially on its effectiveness in terms of reducing poverty. Our findings show that most benefits are clearly insufficient to cover the risk of poverty in terms of both incidence and intensity. The results show the need for the redesign of the system to better articulate existing benefits in order to prevent new forms of poverty and to respond to emergency situations.Key Practitioner Message: • The Spanish system of minimum income benefits consists of a varied mosaic of benefits that provide very different levels of protection for individuals or households with similar needs; • The contribution of these benefits to the reduction in poverty in Spain is very modest and significantly lower than that of contributory pensions; • The protection provided by MIBS is also unequal by population categories.

Public attitudes towards a European minimum income benefit: How (perceived) welfare state performance and expectations shape popular support:

The economic crisis and the unequal degree to which it has affected European Union (EU) member states have fuelled the debate on whether the EU should take responsibility for the living standards o...

Public attitudes towards a European minimum income benefit: How (perceived) welfare state performance and expectations shape popular support

The economic crisis and the unequal degree to which it has affected European Union (EU) member states have fuelled the debate on whether the EU should take responsibility for the living standards of European citizens. The current article contributes to this debate by investigating for the first time public support for an EU-wide minimum income benefit scheme. Through an analysis of data from the European Social Survey 2016, our results reveal that diverging national experiences and expectations are crucial in understanding why Europeans are widely divided on the implementation of such a benefit scheme. The analysis shows that (1) welfare state generosity and perceived welfare state performance dampen support, (2) those expecting that ‘more Europe’ will increase social protection levels are much more supportive, (3) the stronger support for a European minimum income benefit in less generous welfare states is explained by more optimistic expectations about the EU’s domestic impact and (4) lower socioeconomic status groups are more supportive of this policy proposal. These findings can be interpreted in terms of sociotropic and egocentric self-interests, and illustrate how (perceived) performance of the national welfare state and expectations about the EU’s impact on social protection levels shape support for supranational social policymaking.

Falling through the social safety net? Analysing non‐take‐up of minimum income benefit and monetary social assistance in Austria

AbstractNon‐take‐up of means tested benefits is a widespread phenomenon in European welfare states. The paper assesses whether the reform that replaced the monetary social assistance benefit by the minimum income benefit in Austria in 2010/11 has succeeded in increasing take up rates. We use EU‐SILC register data together with the tax‐benefit microsimulation model EUROMOD/SORESI. The results show that the reform led to a significant decrease of non‐take‐up from 53 to 30% in terms of the number of households and from 51 to 30% in terms of expenditure. Following the three‐t's (threshold, trigger, and trade‐off) introduced by Van Oorschot, estimates of a two‐stage Heckman selection model as well as expert interviews indicate that the taken measures include both threshold and trade‐off characteristics. Elements such as the higher degree of anonymity within the claiming process, the provision of health insurance, binding minimum standards, the limitation of the maintenance obligations, new regulations related to the liquidation of wealth, as well as the general coverage of the benefit reform in the media and in public discussions led to an improved access to the benefit.

THE OBLIGATIONS OF PEOPLE BENEFICIARIES OF THE MINIMUM VITAL INCOME: INFRACTIONS AND SANCTIONS AND THEIR POSSIBLE IMPACT ON THE COORDINATION OF SOCIAL SECURITY BENEFITS AT THE EUROPEAN LEVEL

THE OBLIGATIONS OF PEOPLE BENEFICIARIES OF THE MINIMUM VITAL INCOME: INFRACTIONS AND SANCTIONS AND THEIR POSSIBLE IMPACT ON THE COORDINATION OF SOCIAL SECURITY BENEFITS AT THE EUROPEAN LEVEL

Health inequalities in Europe: Does minimum income protection make a difference?

Poverty, a risk factor for ill health, could be alleviated by generous welfare states. However, do generous social policies also reduce the health implications of socio-economic inequalities? This study investigates how minimum income protection is associated with socio-economic health inequalities. The author hypothesises that higher benefit levels are associated with lower health inequalities between income groups. Minimum income benefits support the people most in need, and therefore should improve the health of the lowest income groups, which in turn would reduce overall health inequalities. This hypothesis is tested with the European Social Survey (2002–2012) and the SaMip dataset using three-level multilevel models, covering 26 countries. The results show a robust relationship between benefit levels and individual self-rated health. However, the hypothesis of reduced health inequalities is not completely supported, since the findings for the cross-level interactions between income quintiles and benefit levels differ for each quintile.

Universal basic income with flat tax reform in France

This article evaluates the effects of a revenue-neutral tax reform introducing a universal basic income scheme coupled with a flat income tax which replaces the existing minimum income benefit, several other conditional benefits and the existing progressive income taxation. To this aim we use a Micro–Macro simulation model for the French economy. Interestingly, our results show that the reform induces not only a significant reduction in income inequalities and poverty, but also a slightly positive effect at the macroeconomic level, implying that the equity-efficiency trade-off would not be produced.

Assessing Guaranteed Minimum Income Benefits and Rationality of Exercising Reset Options in Variable Annuities

A variable annuity is an equity-linked financial product typically offered by insurance companies. The policyholder makes an upfront payment to the insurance company and, in return, the insurer is required to make a series of payments starting at an agreed upon date. For a higher premium, many insurance companies offer additional guarantees or options which protect policyholders from various market risks. This research is centered around two of these options: the guaranteed minimum income benefit (GMIB) and the reset option. The sensitivity of various parameters on the value of the GMIB is explored, particularly the guaranteed payment rate set by the insurer. Additionally, a critical value for future interest rates is calculated to determine the rationality of exercising the reset option. This will be able to provide insight to both the policyholder and policy writer on how their future projections on the performance of the stock market and interest rates should guide their respective actions of exercising and pricing variable annuity options. This can help provide details into the value of adding options to a variable annuity for companies that are looking to make variable annuity policies more attractive in a competitive market.

The Family in Minimum Income Benefits in Europe: An Institutional Analysis

AbstractWhether and to what extent the means of family members and familial care activities are relevant in the calculation of welfare benefits is often neglected in welfare state analysis. By quantifying qualitative institutional data, we analyze this aspect and how it has changed in regard to minimum-income benefits for persons of pension age and unemployed persons in ten European welfare states. We find no general trend toward individualization of entitlements but a decreasing relevance of family for the entitlements of persons of pension age, and increasing relevance for the unemployed. The evidence underlines significant differences between countries and family-related dimensions.

Simulation of an application of the Hartz-IV reform in Austria

This paper examines the application of the German Hartz-IV model in Austria. If the Hartz-IV reform were to be transferred to Austria, this would imply that instead of unemployment assistance (Notstandshilfe), the social-assistance-type minimum income benefit (Bedarfsorientierte Mindestsicherung) would be follow-up assistance after unemployment benefit expires. The analysis is carried out using the tax-benefit microsimulation models EUROMOD and SORESI based on the latest EU-SILC 2015 data for Austria. We simulate a baseline scenario according to the minimum income benefit regulations of the nine federal states for the year 2017 and a scenario including a proxy for an asset check of capital income. In addition, following current political discussions and developments, we simulate a ceiling scenario, in which the sum of minimum standards per household is capped at EUR 1,500 per month. The direct (monetary) effects of the potential reform are analysed on three levels: fiscal implications; number of receiving households including socio-demographic characteristics; income distribution and risk of poverty. © 2018, Institute of Public Finance.

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

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.

Welfare Benefits and Unemployment in Affluent Democracies: The Moderating Role of the Institutional Insider/Outsider Divide

The effect of generous welfare benefits on unemployment is highly contested. The dominant perspective contends that benefits provide disincentive to work, whereas others portray benefits as job-search subsidies that facilitate better job matches. Despite many studies of welfare benefits and unemployment, the literature has neglected how this relationship might vary across institutional contexts. This article investigates how unemployment benefits and minimum income benefits affect unemployment across levels of the institutional insider/outsider divide. I analyze the moderating role of the disparity in employment protection for holders of permanent and temporary contracts and of the configuration of wage bargaining. The analysis combines data from 20 European countries and the United States using the European Union Labour Force Survey and the Current Population Survey 1992–2009. I use a pseudo-panel approach, including fixed effects for sociodemographic groups within countries and interactions between benefits and institutions. The results indicate that unemployment benefits and minimum income benefits successfully subsidize job search and reduce unemployment in labor markets with a moderate institutional insider/outsider divide. However, when there is greater disparity in employment protection and when bargaining either combines low unionization with high centralization or high unionization with low centralization, generous benefits create a disincentive to work, plausibly because attractive job opportunities are scarce.

Labor market institutions, the insider/outsider divide and social inequalities in employment in affluent countries

Abstract This article investigates the role of labor market institutions for social inequalities in employment. To distinguish institutional impacts for men and women, age groups and educational levels the analysis draws on data from 21 countries using the European Union Labor Force Survey and the Current Population Survey 1992–2012. The analysis demonstrates that there is significant heterogeneity in the relationship between institutions and employment across social groups. In line with the literature on dualization, institutions that arguably protect labor market insiders, i.e. employment protection, unionization and unemployment benefits, are frequently associated with greater inequality between typically disadvantaged groups and their insider peers. By contrast, institutions that discriminate less between insiders and outsiders, i.e. active labor market policies, minimum income benefits and centralized wage bargaining at times boost social equality on the labor market. The insider/outsider argument provides a valuable heuristic for assessing heterogeneity in institutional impacts, yet in several instances the results deviate from the expectations.

Social Assistance and Minimum Income Levels and Replacement Rates Dataset

The Social Assistance and Minimum Income Levels and Replacement Rates Dataset provides two new indicators for comparisons of social assistance and minimum income benefits across countries and over time, namely real net minimum income benefit levels and net minimum income benefit replacement rates. The dataset contains information for 33 countries for the period 1990–2009. For information on social assistance and minimum income benefits, the dataset draws upon information from Nelson’s (2013) dataset. The minimum income replacement rates are comparable to unemployment replacement rates.