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Minimum income schemes in Europe: is there a trade-off with activation policies?

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  • Roberto Iacono

    (Norwegian University of Science and Technology (NTNU))

Abstract

This paper makes two contributions to the literature. First, by employing a macro-level institutional dataset on benefit levels for social assistance (SA) and minimum income protection (MIP) in 22 European countries in the period 1990–2013, I show that the adequacy of income support for low-income inactive individuals in European welfare states has been steadily decreasing since 1994. Second, the paper revisits empirically the hypothesis of a trade-off between the adequacy of out-of-work benefits and the public expenditure on active labor market policies (ALMPs). The empirical results of the fixed effects model show that the trade-off does not appear to be significant in any of the tested specifications. The results are robust to the introduction of a set of conventional controls related to the labor market. JEL Classification: H53, H55, I38.

Suggested Citation

  • Roberto Iacono, 2017. "Minimum income schemes in Europe: is there a trade-off with activation policies?," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-15, December.
    • Handle: RePEc:spr:izaels:v:6:y:2017:i:1:d:10.1186_s40174-016-0073-2
    DOI: 10.1186/s40174-016-0073-2
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    References listed on IDEAS

    as
    1. Verónica Escudero, 2018. "Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-26, December.
    2. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, vol. 82(1), pages 249-261, March.
    3. repec:ilo:ilowps:487304 is not listed on IDEAS
    4. Anders Molander & Gaute Torsvik, 2013. "Getting People into Work: What (if Anything) Can Justify Mandatory Activation of Welfare Recipients?," CESifo Working Paper Series 4317, CESifo.
    5. John Martin, 2015. "Activation and active labour market policies in OECD countries: stylised facts and evidence on their effectiveness," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-29, December.
    6. Sarah Marchal & Ive Marx & Natascha Van Mechelen, 2016. "Minimum income protection in the austerity tide," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-20, December.
    7. Herwig Immervoll & Stefano Scarpetta, 2012. "Activation and employment support policies in OECD countries. An overview of current approaches," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-20, December.
    8. Immervoll, Herwig, 2012. "Activation policies in OECD countries : an overview of current approaches," Social Protection Discussion Papers and Notes 71903, The World Bank.
    9. Besharov, Douglas J. & Couch, Kenneth A. (ed.), 2012. "Counting the Poor: New Thinking About European Poverty Measures and Lessons for the United States," OUP Catalogue, Oxford University Press, number 9780199860586.
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    Cited by:

    1. Luis Ayala & José María Arranz & Carlos García‐Serrano & Lucía Martínez‐Virto, 2021. "The effectiveness of minimum income benefits in poverty reduction in Spain," International Journal of Social Welfare, John Wiley & Sons, vol. 30(2), pages 152-169, April.

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    More about this item

    Keywords

    Social assistance; Minimum income protection; Active labor market policies; European welfare states;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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