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Reducing inequality and poverty in Portugal

Author

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  • Jens Matthias Arnold

    (OECD)

  • Carlos Farinha Rodrigues

    (University of Lisbon)

Abstract

Portugal has one of the most unequal income distributions in Europe and poverty levels are high. The economic crisis has halted a long-term gradual decline in both inequality and poverty and the number of poor households is rising, with children and youths being particularly affected. Unemployment is one of the principal reasons why household incomes declined. The tax and benefit system alleviates both inequality and poverty significantly. The tax system is markedly progressive, and recent tax reforms have likely increased this progressivity. Transfer payments, especially non-pension benefits, are reducing inequality and poverty in a fairly efficient way. Nonetheless, a number of adjustments could strengthen the equalising role of the benefit system, which is generally biased towards benefits for elderly people, while families with children should receive more support. The education system should provide more support to students at risk of falling behind to reduce grade-repetition and drop-out rates, while further increasing class sizes would be a reasonable way to generate savings without affecting learning progress much. Scaling up vocational courses and adult education, including in the context of active labour market policies, could improve the capacity of many households to generate income and lead to a more equitable income distribution. Réduire les inégalités et la pauvreté au Portugal Le Portugal est l’un des pays d’Europe où la distribution des revenus est la plus inégalitaire, et les niveaux de pauvreté y sont élevés. La crise économique a mis fin à une baisse progressive de longue durée à la fois des inégalités et de la pauvreté, et le nombre de ménages pauvres s’accroît, les enfants et les jeunes étant particulièrement touchés. Le chômage est l’une des principales raisons du recul des revenus des ménages. Le système de prélèvements et de transferts contribue à soulager fortement les inégalités et la pauvreté. Le système fiscal est fortement progressif, et il est probable que les réformes récentes l’ont rendu encore plus progressif. Les transferts, en particulier les prestations autres que les pensions, réussissent assez bien à réduire les inégalités et la pauvreté. Le système éducatif devrait mieux soutenir les étudiants en risque de décrochage afin de réduire les taux de redoublement et d’abandon, tandis que l’augmentation des effectifs dans les classes serait un moyen raisonnable de générer des économies sans compromettre trop les apprentissages. En développant l’enseignement professionnel et la formation des adultes, notamment dans le contexte de politiques actives du marché du travail, on pourrait offrir à de nombreux ménages la possibilité d’accéder à de meilleurs revenus, ce qui aboutirait à une distribution des revenus plus équitable.

Suggested Citation

  • Jens Matthias Arnold & Carlos Farinha Rodrigues, 2015. "Reducing inequality and poverty in Portugal," OECD Economics Department Working Papers 1258, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1258-en
    DOI: 10.1787/5jrw21ng3ts3-en
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    Citations

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    Cited by:

    1. Michala Lustigova & Dagmar Dzurova & Claudia Costa & Paula Santana, 2019. "Health Disparities in Czechia and Portugal at Country and Municipality Levels," IJERPH, MDPI, vol. 16(7), pages 1-16, March.
    2. Tingyun Chen & Jean-Jacques Hallaert & Alexander Pitt & Haonan Qu & Maximilien Queyranne & Alaina Rhee & Anna Shabunina & Jérôme Vandenbussche & Irene Yackovlev, 2018. "Inequality and Poverty across Generations in the European Union," IMF Staff Discussion Notes 18/01, International Monetary Fund.
    3. António Pereira & André Biscaia & Isis Calado & Alberto Freitas & Andreia Costa & Anabela Coelho, 2022. "Healthcare Equity and Commissioning: A Four-Year National Analysis of Portuguese Primary Healthcare Units," IJERPH, MDPI, vol. 19(22), pages 1-12, November.
    4. Ricardo Pinheiro Alves, 2017. "Portugal: a Paradox in Productivity," GEE Papers 0070, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jun 2017.
    5. Aurora A. C. Teixeira & Ana Sofia Loureiro, 2019. "FDI, income inequality and poverty: a time series analysis of Portugal, 1973–2016," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 18(3), pages 203-249, October.
    6. Cláudia Costa & Paula Santana, 2021. "Gender and Age Differences in Socio‐economic Inequalities in Total and Avoidable Mortality in Portugal: A Trend Analysis," Fiscal Studies, John Wiley & Sons, vol. 42(1), pages 123-145, March.

    More about this item

    Keywords

    distribution; education; pension; tax; transfers; wages;
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