Revisiting Welfare States. Performance in Reducing Poverty through Longitudinal Multinational Comparison

This article presents the results of a comparative study on the effects of social welfare programs in selected developed countries. Using a fully comparable longitudinal data file from nationally representative household surveys, we estimate the poverty rate and poverty gap before and after social welfare transfers and taxes in order to identify the direct effects of social welfare on poverty. In general, the findings reveal that countries with conservative welfare regimes demonstrate higher poverty performance than do countries with liberal welfare regimes. In particular, the United States lagged behind through all periods under investigation, whereas Germany exhibited the highest performance in poverty reduction.     

Old-Age Income Security and Private Transfers in South Korea

We examined the relative contributions of government income support programs and familial transfers to old-age income security in Korea. This issue is critical, as policy reforms are in progress, and the potential crowding-out effect of government programs on familial transfer is at the center of heated debate. Using the 2006 Korean Longitudinal Study of Aging, we found that one-third of the elderly were poor and the contribution of public transfer to income security for the elderly was limited, whereas family, especially children, played a large role both by co-residing and through private transfers. Crowding out is less of a problem for the poor but a sensitive issue for middle-income families.     

Effects of federal programs on children: Absolute poverty, relative poverty, and income inequality

Since the 1996 welfare reform, federal spending on means-tested programs targeting the poorest children has decreased, while programs that benefit children in low-income working families have been expanded substantially. With this background, this study examined changes in the antipoverty and anti-inequality effects of children's programs between 1995 and 2007 using data from the Annual Social and Economic (ASEC) Supplements to the Current Population Survey (CPS). The findings suggest that although the poverty-reduction effects of the federal child programs increased between 1995 and 2007, the programs' effects on the reductions of children's absolute poverty gaps, relative poverty rates, relative poverty gaps, and income inequality all decreased. More importantly, the antipoverty effects of the federal child programs were most weakened for the poorest children (i.e., those in female-headed, immigrant, and nonworking families) between 1995 and 2007.     

Bridging the gap: The impact of home visiting programs for orphans and vulnerable children on social grant uptake in South Africa

Cash transfer programs hold significant potential to mitigate the economic burdens resulting from the HIV epidemic and enhance the wellbeing of affected children. South Africa offers two cash transfers designed specifically to benefit children: the Child Support Grant, for low income families with children, and the Foster Child Grant, for children living outside of parental care. Given the high proportion of HIV-affected children who qualify for these grants, increasing grant access among eligible families is a natural objective for many programs targeting orphans and vulnerable children. We present results from a quasi-experimental study examining differences in grant uptake over a two year period among 1487 children enrolled in one of two types of supportive home visiting programming: volunteer-based or paraprofessional. The study also examined related outcomes including household food security and children's access to basic educational and material needs. Results show that programs staffed with trained paraprofessionals who received training, compensation and other support were significantly more effective at linking families to social grants for children. Controlling for important covariates, at follow-up participants in the paraprofessional model programs were nearly three times as likely as volunteer-based service recipients to have access to the highest grant they were eligible to receive. Grant receipt was also positively associated with household food security and children's obtainment of basic educational and material resources. Effective strategies for promoting social grant access among HIV-affected households therefore have the potential to yield significant improvements in wellbeing for orphans and vulnerable children.     

Income Inequality,Globalization, and the Welfare State: Evidence from 23 Industrial Countries, 1990–2009

The debate regarding the welfare state–weakening effect and the income inequality‐increasing effect of globalization remains a contentious issue among stratification scholars. For some, globalization increases income inequality, while for others, globalization has no, or a negligible, effect on income inequality. This study brings new evidence to bear on this debate by separately investigating effects of multiple indicators of globalization (international trade, foreign direct investment [FDI] and immigration), and of welfare state generosity (government social‐protection spending) on (1) income inequality before taxes and transfers and (2) income inequality after taxes and transfers, using data from 23 Organisation for Economic Co‐operation and Development (OECD) countries over 1990–2009. First, results show a positive effect of international trade, a negative effect of immigration, but no effect of FDI and government social‐protection spending on income inequality before taxes and transfers. Second, results show no effect of the globalization indicators but a negative effect of government social‐protection spending on income inequality after taxes and transfers. These findings suggest that (1) globalization has inequality‐increasing effects depending on measures of income inequality; (2) the welfare state, in many OECD countries, continues to shape income distribution; and (3) in contrast with the popular narrative, immigration may decrease income inequality.     

“Left Behind?” Financialization and Income Inequality Between the Affluent,Middle Class,and The Poor

There is increasing scholarly evidence that financialization has contributed to rising income inequality, especially by concentrating income among the affluent and rich. There is less empirical research examining who is losing out to the affluent. This paper fills this gap by examining how three measures of financialization (finance, insurance, and real estate or FIRE employment; credit expansion; and financial crises) affect upper-tail (measured as the ratio between the 90th and 50th income percentiles) and lower-tail (measured as the ratio between the 50th and 10th income percentiles) income inequality. Using concepts from economic sociology and the social stratification literature, I develop a perspective that links financialization to income inequality by creating more unequal market incomes while simultaneously reducing redistribution and social transfers. I analyze disposable household income data (after taxes and transfers) from the Luxembourg Income Study (LIS) and other public sources like the OECD from 16 affluent nations between the years 1981 and 2011, and I use an unbalanced panel design due to LIS data coverage. I find that the relative incomes of both the middle class and the poor are hurt by financialization (strongest evidence tied to FIRE employment); however, relative incomes of the poor are especially sensitive to financialization.     

Public education provision,private schooling and income redistribution

Availability of free public education induces a transfer in kind among households with school age children. We provide evidence of the redistributive character of public education provision. We estimate structural quantile treatment effects of household income on the distribution of expected educational transfers in kind. Under the assumption that education quality is a normal good, better services (ancillary to the core education mission) supplied by private schools increase quality therein and reduce the incentives for wealthy households to enroll in public education. Because of these incentives, rich families benefit less from educational transfers in kind and the public education system is redistributive. Using household survey data from Italy, we find that an increase in net income reduces the value of the expected educational in kind transfers for compulsory education.     

Reducing poverty and inequality through tax-benefit reform and the minimum wage: the UK as a case-study

Atkinson’s book Inequality: What Can Be Done? (Harvard University Press, 2015) sets out a range of concrete proposals aimed at reducing income inequality, which cover a very broad span but include major changes to the income tax and social transfers system and the minimum wage. These are framed with specific reference to the UK but have much broader relevance in demonstrating how substantial the impact on inequality of such measures could be. This paper assesses the first-round effects of these tax, transfer and minimum wage reforms on income inequality and poverty based on a microsimulation approach using EUROMOD. The reforms involve a significantly more progressive income tax structure, a major increase in the minimum wage to the level which is estimated to represent the ‘Living Wage’, and alternative routes to reforming social transfers – either to strengthen the social insurance element or to restructure the entire system as a Participation Income (a variant of Basic/Citizen’s Income). The results show how the first-round effects of either set of tax and transfer proposals would be to substantially reduce the extent of income inequality and relative income poverty and the paper draws out how the two approaches differ in their effects. The additional impact of raising the minimum wage to the Living Wage is modest, reflecting in particular the position of beneficiaries in the household income distribution and the offsetting effects on household income of the withdrawal of means-tested cash transfers.     

Giving Unto Others: Private Financial Transfers and Hardship Among Families With Children

Prior research shows that financial assistance from family and friends is an important source of support for families with children. Research on financial transfers has largely focused on the recipients of transfers, however. In this study, using longitudinal data from the Fragile Families and Child Wellbeing Study (n ～ 16,000 person‐waves), the authors examine the association between the provision of financial assistance to family and friends and material hardship. The results from pooled regression and fixed effects models indicate that providing financial transfers is associated with an increased risk of hardship. The most economically disadvantaged groups, single mothers, those in the bottom income tertile, and Black mothers are the most likely to experience hardship after giving a transfer. These findings have important implications for understanding why families may have difficulty meeting basic and essential needs and how social networks may exacerbate the challenges of escaping poverty and establishing economic self‐sufficiency.     

Impact of Public and Private Cash Transfers on Poverty and Inequality: Evidence from Vietnam

This article investigates the extent to which public and private transfers affected poverty and inequality in Vietnam in the mid‐2000s. It finds that the impact of public transfers on poverty was negligible, due to the low coverage of the poor and the relatively small amounts transferred. Moreover, the effect of the receipt of transfers on expenditures was small: recipients decreased the labour supply and only a limited amount of the extra income went to current consumption. Domestic private transfers were somewhat more successful in reducing poverty. With most public and private transfers going to non‐poor households, inequality was only marginally affected.     

Low Income Families' Utilization of the Federal "Safety Net": Individual and State-Level Predictors of TANF and Food Stamp Receipt

Two of the primary programs through which the federal government provides benefits to low income families are the Temporary Assistance for Needy Families (TANF) program and the Food Stamp program. However, many eligible low income families do not actually receive these benefits. We combined state-level policy data with rich data on a national sample of low income families to investigate family and state-level predictors of TANF and Food Stamp receipt. Our findings indicate: 1) families experiencing more economic hardship and health challenges are more likely to receive benefits, and 2) states' coverage is associated with families' receipt of TANF, but not Food Stamps. Implications for policy and research are discussed.     

Running on empty: Monitoring the lives and circumstances of formerly homeless families with children

Homelessness is a manifestation of acute poverty accompanied by long-term unemployment, deficient human capital, problems with substance abuse, inadequate welfare benefits, and other vulnerabilities. Homeless people have problems that require sustained intervention strategies that will permit them the opportunity to enter the labor market, maintain permanent housing, remain healthy and functional, and take care of their families. To this end, more and more transitional housing programs have been opened—programs that provide shelter stays of longer duration than emergency shelters as well as an array of support services designed to help people move along the path toward economic independence. Do people do better after living in transitional housing? To address this question, this research monitored homeless families who “graduated” from a large transitional housing program in Baltimore. Following two cohorts of families for more than one year at several points in time, this research finds that families exhibited a series of positive changes in the lives of both adults as well as children. Families did not become economically self-sufficient as indicated by complete independence from income maintenance programs. This study suggests that the availability of income maintenance programs, particularly rental housing subsidies may be a critical factor in permitting homeless people to stabilize their life situations.     

The future in anti-poverty strategies

The uneven distribution of income and assets in the United States continues to have negative effects on the personal, social, and economic well-being of adults and children. Poverty affects the entire family and is often associated with household instability, school dropouts, teen pregnancies, and intergenerational poverty. Although income-based anti-poverty policy initiatives have helped individuals with children meet their basic consumptive needs, they have done little to help families lay a foundation for their futures. The implementation of asset-building programs that provide Individual Development Accounts (IDAs) to both adults and children reflects an approach to reducing the incidence and impact of poverty in the United States. Current state and federal policy initiatives that are designed to help economically vulnerable individuals build assets are also described in this paper. Implications of asset-building program and policy initiatives on the well-being of low-income children and adults, households, and communities are discussed to demonstrate the impact that resources and opportunities have on the social and economic growth of the entire family.     

Social Capital and Community Supportsfor Low Income Families

Abstract

The Personal Responsibility, Work Opportunity and Medicaid Restructuring Act of 1996 changed welfare dramatically. This article explores the concept of social capital, illustrating how social and cultural capital are important factors that make the difference between persistent and temporary poverty. Through research in Wisconsin and Philadelphia, this article shows that social capital provides both barrier and bridge to families trying to survive in a changed policy context. However, just as programs focusing exclusively on work experience, developing human capital, or providing additional income fail to produce results for everyone on public assistance, programs concentrating exclusively on social or cultural capital are also doomed to failure.     

Comparing Child Poverty Risk by Family Structure During the 2008 Recession

Children in nonmarried families are at greater risk for poverty and especially so during a time of macroeconomic recession. Using carefully harmonized data, the authors analyze child poverty among nonmarried families before and during the 2008 recession in five liberal welfare states: Australia, Canada, Ireland, the United Kingdom, and the United States. Although having similar demographic compositions, the authors document wide cross‐national variation in poverty risk based on marital status and gender of the household head. Through the recession, child poverty in Canada and the United Kingdom declined while it increased in Australia and Ireland and was largely unchanged in the United States. Decomposing changes within countries over time, family benefits in the form of income transfers play a major role in reducing poverty for nonmarried families. In all countries, children in cohabitating families were less protected from market instability.     

Armut von Erwerbstätigen im europäischen Vergleich

In Europe, there are significant differences in the extent and in the structure of in-work poverty. Based on a comparison of 20 countries the present study analyses to what extent this is due to the differences in the institutional framework conditions of a given country. The analyses are based on micro data from the EU Statistics on Income and Living Conditions (EU-SILC) of 2006 and macro data from different sources. The analyses distinguish between different steps in the process of income generation and redistribution. The starting point is the question whether a person's own income from work is sufficient to avoid poverty. Further steps regard the role of the household context (needs and further income) and the effect of state redistribution (taxes and transfers). This comprehensive perspective allows for a separation of labour market related and other influences on the risk of in-work poverty.     

Cracks in a policy paradigm – poverty reduction and social security: the case of Belgium

Poverty reduction rests on the mechanisms of horizontal and vertical solidarity and on prevention and repair of social risks. In this contribution, we argue that in contemporary welfare states the poverty-reducing capacity of existing social security systems has inherent limitations. Focusing on Belgium, we present and discuss empirical indications of a persistent (over a period of at least 30 years) decline in poverty reduction through social transfers, particularly among households who are highly dependent on such transfers. Firstly, we show that prevention and repair have failed to contribute to a reduction in the proportion of work-poor households who are highly dependent upon social security and face a high (rising even) poverty risk. Secondly, we find that given the fragmentation of social risks – in terms of both ex post poverty outcomes and ex ante social stratification – horizontal redistributive mechanisms through risk pooling have become less obvious, especially in respect of unemployment. Thirdly, it appears that the mechanisms of vertical solidarity also face inherent limitations. In a final section we summarise some important research questions for the future and potentially worthwhile policy avenues to resolve the question of how social policy-making might succeed in the future where it has failed in the past.     

Fragile families in the American welfare state

The proportion of children born out of wedlock is now over 40%. At birth, about half of these parents are co-habiting. This paper examines data from the Fragile Families and Child Wellbeing study (N = 4271) to describe for the first time the role of welfare state benefits in the economic lives of married, cohabiting, and single parent families with young children. Surprisingly, total welfare state benefits received by the three family types are relatively similar. Nearly half of the full incomes of fragile families come from welfare state transfers. For single parent families the proportion is slightly more than two thirds. Though aggregate welfare state transfers are approximately equal across family type and thus change very little as marital status changes, these transfers and the taxes required to finance them cushion family status changes and substantially narrow the gap in full income between married and fragile families.     

“NEW” STRUCTURAL POVERTY?

Proponents of the new structural poverty thesis contend that "overly generous" meanstested transfer payments increase poverty by encouraging female headship and welfare dependency. Skeptics of this view concede that transfer programs have serious faults, but argue that their overall effect is to reduce poverty. Focusing on states' Aid to Families with Dependent Children (AFDC) programs, this article examines how well these competing hypotheses account for changes in poverty since 1960. AFDC contributed to the substantial poverty reduction of the 1960s. By the next decade, however, such effects attenuated, in part because the most generous programs began to encourage slight increases in female headship, which exacerbates poverty. The new structural poverty thesis may offer some understanding of the feminization of poverty in recent years, but the argument that AFDC transfers generate poverty is unfounded.
The welfare system is anti-work, anti-family, inequitable in its treatment of the poor and wasteful of taxpayers' dollars. It provides incentives for family breakup. It discourages work. (Carter 1977)     

Civic life in Gray Mountain: sizing up the legacy of New England’s blue-collar middle class

When President Clinton took Congressional and business leaders on a tour early this summer to places where chronic poverty has persisted despite the nation’s booming economy, they visited Appalachia’s coalfields, the Mississippi Delta, the Pine Ridge Indian reservation and inner-city neighborhoods in East St. Louis and Los Angeles. They did not visit New England. Not that New England’s inner cities aren’t plagued with poverty and social problems; they are. And many poor families are struggling to get by in rural Maine, New Hampshire, and Vermont. Yet the notoriously bad conditions that took the president to the nation’s “poverty pockets” are exceedingly rare in the six-state region. Why? Why have poverty rates stayed so high in the South compared with New England? And what can the region expect in the future?The answers lie in the kind of civic culture generated by each community’s economy and social structure. Chronically poor places are divided by race and class and saddled with corrupt politics, ineffective schools, and self-interested elites. Distrustful of one another, people in these places look out only for their own families. Escaping poverty is possible only for the lucky few who have a kind relative, caring teacher, or coach who pushes and inspires them to finish school and aim high. But most stay trapped in the same poor conditions their parents and perhaps grandparents knew.In contrast, when communities have a large middle class, the poor are less likely to be cut off from the mainstream. And they are more likely to have the set of contacts, habits and skills—the cultural tool kit—they need to leave poverty behind. More importantly, the community institutions that poor families rely upon are more likely to be effective because the middle class is committed to them. The poor can get ahead without relying solely on personal intervention from a mentor or other benefactor.During the 1990s, I studied poverty and community change in three remote, rural communities: a poor Appalachian coal county I call “Blackwell,” a poor Mississippi Delta plantation community I call “Dahlia” and a more stable and economically diverse northern New England mill community, “Gray Mountain.” The idea was to learn why poverty persisted generation after generation in Appalachia and the Delta, what made the difference when people did achieve upward mobility, and why it was so hard to bring about change. I examined 100 years of Census data detailing changes in population, patterns of work, income distribution and education. I read histories of each region, as well as the local weekly newspapers. But the heart of the study is the 350 in-depth interviews colleagues and I conducted with people living in these communities—not only the poor, but also the rich and those in between. These open-ended conversations revealed how each community’s civic culture—its level of trust, participation and investment—shapes opportunities for both individual mobility and social change.