Using the European tax-benefit microsimulation model, EUROMOD, based at ISER, researchers from the Policy Analysis Research Unit at the Athens University of Economics and Business, have found the deep and prolonged recession in Greece is having a dramatic impact on income distribution.
The study used EUROMOD to monitor how income distribution in Greece has changed in recent years, in the absence of timely official statistics.
EUROMOD is a tax-benefit microsimulation model for the European Union that enables researchers and policy analysts to calculate, in a comparable manner, the effects of taxes and benefits on household incomes and work incentives for the population of each country and for the EU as a whole.
As well as calculating the effects of actual policies it is also used to evaluate the effects of tax-benefit policy reforms and other changes on poverty, inequality, incentives and government budgets.
Poverty amidst the crisis in Greece, by Manos Matsagnis, Chrysa Leventi and Eleni Kanavista, found that applying a fixed poverty threshold (60 per cent of the 2009 median in real terms) meant a rise in those considered to be poor before the recession to 35 per cent of the population. Setting an extreme poverty threshold, equal to the cost of a basket of basic necessities, the researchers found that this meant 8.5 per cent of the population would not be able to afford this since the recession began. Poverty rates were significantly higher for children and dramatically higher for the unemployed – less than 17 per cent of these receive any unemployment benefits.
The authors state:
“Given that huge gaps in coverage remain a key feature of the social safety net in Greece, the sharp rise in unemployment (to around 25 per cent) threatens to drag entire families into poverty. We argue that this is the new ‘social question’ of our times. Dealing with it effectively, in today’s adverse conditions, will require a radical shift in policy and a fundamental re-think of priorities.”
Poverty amidst the crisis in Greece, by Manos Matsagnis, Chrysa Leventi and Eleni Kanavista is produced by Kritiki Publishers and supported by the EUROMODupdate2 Project which is funded by the European Commission.