February 15, 2019
This article examines how income poverty is affected by changes to the scale of tax-benefit policies and which are the most cost-effective policies in reducing poverty or limiting its increase in seven diverse EU countries. We do that by measuring the implications of increasing/reducing the scale of each policy instrument, using microsimulation methods while holding constant the policy design and national context. We consider commonly applied policy instruments with a direct effect on household income: child benefits, social assistance, income tax lower thresholds and a benchmark case of rescaling the whole tax-benefit system. We find that the assessment of the most cost-effective instrument may depend on the measure of poverty used and the direction and scale of the change. Nevertheless, our results indicate that the options that reduce poverty most cost-effectively in most countries are increasing child benefits and social assistance, while reducing the former is a particularly poverty-increasing way of making budgetary cuts.
Journal of European Social Policy
Volume and page numbers
Volume: 29 , p.29 -43
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Improving poverty reduction in Europe: what works best where?Chrysa Leventi, Holly Sutherland, Iva Valentinova Tasseva,
EUROMOD Working Paper Series - 20170510
Improving poverty reduction in Europe: what works (best) where?Chrysa Leventi, Holly Sutherland, Iva Valentinova Tasseva,
Research Paper - 20160515