Wednesday, 1 March 2017

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

an article by Roberto Iacono (Norwegian University of Science and Technology (NTNU), Trondheim, Norway) published in IZA Journal of European Labor Studies Volume 6 (2017) Article 1


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

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