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The end of decent social protection for the poor? The dynamics of low wages, minimum income packages and median household incomes

Author

Listed:
  • Bea Cantillon
  • Diego Collado
  • Natascha Van Mechelen
Abstract
Why is it that, in almost three decades and despite growth of income, employment and high levels of social spending, even the most developed welfare states in the world failed to improve minimum income protection for families with children? To what extent the erosion of minimum income protection for the working age population compared to median household incomes has been occasioned by exogenous changes either in median household incomes or in gross low wages? Or, has the erosion been associated with deliberate cutbacks of benefit levels? We focus on a limited set of vulnerable households with children, viz. working-aged couples and single parents who either are jobless or live on one low wage and use survey data (ECHP 1994-2001 and SILC 2005-2008 and 2012) and standard simulations of disposable incomes of typical households in order to address these questions. We find that in all EU’s most developed welfare states minimum income protection for work-poor households with children fall short compared to the poverty threshold (defined as 60% of equivalised median household income). Typically, in the decades before the crisis this shortfall has become increasingly bigger. In most countries with available data this was not associated with deliberate cuts in benefit levels for the poor: in general, net disposable incomes of families on social assistance evolved at a similar pace as the net income packages of corresponding families on low wages. Rather, the erosion of the minimum social floor appears to have been related to sinking gross low wages compared to median household incomes. This points at severe and increasing structural difficulties to reduce poverty.

Suggested Citation

  • Bea Cantillon & Diego Collado & Natascha Van Mechelen, 2015. "The end of decent social protection for the poor? The dynamics of low wages, minimum income packages and median household incomes," ImPRovE Working Papers 15/03, Herman Deleeck Centre for Social Policy, University of Antwerp.
    • Handle: RePEc:hdl:improv:1503
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    References listed on IDEAS

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    Cited by:

    1. Diego Collado & Bea Cantillon & Karel Van den Bosch & Tim Goedemé & Dieter Vandelannoote, 2016. "The end of cheap talk about poverty reduction: the cost of closing the poverty gap while maintaining work incentives," ImPRovE Working Papers 16/08, Herman Deleeck Centre for Social Policy, University of Antwerp.
    2. Bea Cantillon & Sarah Marchal & Chris Luigjes, 2017. "Decent Incomes for the Poor: Which Role for Europe?," Journal of Common Market Studies, Wiley Blackwell, vol. 55(2), pages 240-256, March.
    3. Martina Lubyová & Miroslav Štefánik & Pavol Baboš & Daniel Gerbery & Veronika Hvozdíková & Katarína Karasová & Ivan Lichner & Tomáš Miklošovic & Marek Radvanský & Eva Rublíková & Ivana Studená, . "Labour Market in Slovakia 2017+," Books, Institute of Economic Research, Slovak Academy of Sciences, edition 1, number 003.
    4. Johanna Greiss & Bea Cantillon & Sarah Marchal & Tess Penne, 2019. "Europe as agent that fills the gaps? The case of FEAD," Working Papers 1903, Herman Deleeck Centre for Social Policy, University of Antwerp.
    5. Alexandros Karakitsios & Manos Matsaganis, 2018. "Minimum Wage Effects on Poverty and Inequality," DEOS Working Papers 1801, Athens University of Economics and Business.
    6. Jekaterina Navicke & Romas Lazutka, 2016. "Work incentives across the income distribution and for model families in Lithuania: 2005-2013," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 16(2), pages 175-191.
    7. Bea Cantillon, 2018. "Social Security and Poverty Reduction in Rich Welfare States: Cracks in the Post War Policy Paradigm, Avenues for the Future," Working Papers 1817, Herman Deleeck Centre for Social Policy, University of Antwerp.
    8. Navicke, Jekaterina & Lazutka, Romas, 2015. "Work incentives at the bottom of the income distribution and for model families in Lithuania," EUROMOD Working Papers EM14/15, EUROMOD at the Institute for Social and Economic Research.
    9. Verbist, Gerlinde & Vandelannoote, Dieter, 2017. "The impact of in-work benefits on employment and poverty," EUROMOD Working Papers EM4/17, EUROMOD at the Institute for Social and Economic Research.

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    More about this item

    Keywords

    poverty; low wages; social benefits;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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