The Capacity of Social Policies to Combat Poverty Among New Social Risk Groups

This paper considers groups who are most likely to be vulnerable to new social risks and tests the effects of social policies on their poverty levels. Specifically, the paper conducts multi-level regression analyses across 18 OECD countries near the year 2004, analyzing the effects of social policies on the likelihood of being poor of low-skilled young women and men aged 18-30, and of those at risk of possessing obsolete skills, namely low-educated men aged 55-64. The analyses are conducted by combining both macro-level policy data and household-and person-level micro-data from the Luxembourg Income Study (LIS) cross-national database. The central question asks which policies – active labor market policies (ALMP), passive labor market policies (PLMP), employment protection legislation (EPL), family policies, government daycare spending – are effective at combating new social risks. In addition to analyzing social policies, the paper also considers union density and representation of women in national parliaments as two measures that depict agents who are most intent on combating old and new social risks, respectively. The findings show that active labor market policies (ALMP) are the most important predictor of a decrease in poverty levels among the low skilled. The negative effect of passive labor market policies (PLMP) on poverty is only significant for the older male group. Family policies are related to a reduction in poverty for both low-skilled young women and men. Union density is significant in reducing the odds of poverty of the older male group, while it is insignificant for both younger males and females – thereby reflecting a measure of prevention against old, but not new, social risks. Additionally, the paper’s findings support the hypothesis that the greater the representation of women in national parliaments, the greater the chances of having policies that are associated with a reduction of poverty across age levels. Lastly, gross public social spending as a measure of overall welfare generosity is found to be associated with a reduction in poverty only of the older male group, but not that of the younger groups. The paper’s analyses suggest that some social policies remain geared toward older segments of society, leaving the younger population at greater financial and therefore social risk.