Christos Papatheodorou

What drives inequality and poverty in the EU? Exploring the impact of macroeconomic and institutional factors

Employing panel data techniques, we investigate the macroeconomic and institutional determinants of inequality and poverty in the EU over the period 1994–2008. We pay particular attention to the effects of macroeconomic environment, social protection and labour market institutions. The empirical analysis shows that the social transfers in cash, and principally the transfers that do not include pensions, exert a prominent impact on inequality and poverty. Also significant is the effect of the GDP per capita. The impact of employment on inequality and poverty is not empirically sound. The same holds for the labour market institutions; an exception is the union density, which appears conducive to a less dispersed personal income distribution. Importantly, the results support the view that the social protection system acts as a catalyst in determining the effectiveness of social spending and the distributive role of economic growth and employment.

Linking Functional with Personal Income Distribution: A Stock-Flow Consistent Approach

This paper develops a benchmark stock-flow consistent model that links functional with personal income distribution. The model consists of various household groups that receive income from different sources or from the same sources in different proportions. The dynamic linkage between functional and personal income distribution is formulated as part of a complete macroeconomic system. Inequality decomposition techniques are employed to associate income sources with personal income distribution. Simulation exercises are conducted to reveal the various ways through which functional and personal income distribution interact. In the simulations, a rise in the exogenous component of low-skilled workers’ wage share reduces inequality in the short run; in the medium to long run inequality starts increasing due to certain macroeconomic developments, but remains lower than its initial level in almost all cases. A change in functional income distribution due to a rise in the dividend payout ratio of firms increases inequality both in the short run and the long run.

Dismantling the Feeble Social Protection System of Greece: Consequences of the Crisis and Austerity Measures

This chapter examines the Greek social protection system by focusing on the dismantling effects of the economic crisis and the neo-liberal austerity measures. Despite sound empirical findings on pre-existing inadequacies of the Greek social protection system, the austerity measures introduced within the framework of the Memoranda signed with Troika (EU, ECB and IMF) further weakened the capacity of the system to address social risks such as unemployment, inequality and poverty. Against the background of an ageing society, Greece faces a number of challenges in all social policy fields. In the labour market, sky rocketing unemployment levels followed the economic crisis and the deregulation measures imposed while wages were drastically reduced. Pensions, one of the main tenets of the social protection system accounting for more than half of social protection benefits, were drastically reduced affecting the living standards of the elderly. The quasi-universal character of the health system was seriously compromised by drastic cuts leaving public hospitals to manage increased admission rates with reduced budgets and an increasing part of the population uninsured. The other historically underdeveloped social policy areas (i.e. housing, family-child care, long-term care) impose significant burdens on families, the traditional providers of welfare in Southern European countries, in a context of shrinking incomes from work and pensions and imposed flat-rate taxes on house property. These developments taken together resulted in unprecedented levels of poverty and inequality for the Greek population.

Working poor, labour market and social protection in the EU: a comparative perspective

This paper offers some crucial insights into the incidence and determinants of in-work poverty in the EU. It shows that in-work poverty plays a principal role in the determination of overall poverty, and it explores the impact of the social protection system and labour market conditions on the incidence of in-work poverty. The comparative analysis illustrates that higher flexibility in the labour market may have an unfavourable impact on in-work poverty. It also brings to the fore the prominent role of the social protection system in the alleviation of poverty among the working population.

Verspätete Entwicklung der sozialen Sicherung: Das griechische Wohlfahrtssystem

In der Wohlfahrtsstaatsforschung wird haufig die Ansicht vertreten, das griechische Wohlfahrtssystem sei ruckstandig gegenuber den Systemen nordwesteuropaischer Staaten. Es ist sehr fragmentiert, die verschiedenen Sozialleistungen sind rudimentar und wenig koordiniert. Das Wohlfahrtssystem weist eine starke Polarisierung auf und verwandtschaftliche Netzwerke spielen eine zentrale Rolle bei der Bereitstellung von Wohlfahrtsleistungen.

Income Inequality in the EU: How Do Member States Contribute?

Purpose - – The purpose of this paper is to analyse the structure of overall inequality in the EU-15 by investigating the extent to which total inequality is attributed to inequality between or within the individual countries. Also, the paper examines whether the contribution of between-country and within-country components changed in the period between 1996 to 2008, before the outbreak of the economic crisis. Design/methodology/approach - – The paper applies a decomposition analysis by population subgroup utilizing micro-data from the ECHP and EU-SILC surveys. A number of inequality indices are employed to capture the different aspects of inequality and test the robustness of the results. Findings - – The analysis shows that the between-countries differences account only for a small part of overall inequality in the EU-15. Furthermore, the contribution of the between county component to total inequality has shrunk dramatically during the examined period. The overall EU inequality has been affected disproportionally by income disparities at the various parts of the income distribution in different countries. Practical implications - – Policies aiming to reduce inequality within each country would be far more effective in reducing overall inequality in the EU than policies targeting to reduce only disparities between member states. Originality/value - – The findings question the effectiveness of EU policy priorities to decrease inequality that have mainly focused on reducing cross-country and/or regions differences regarding certain macroeconomic indicators such as per-capita income (or GDP). The evidence suggests that the social protection system provides a useful tool in explaining the differences in inequality between countries and their contribution to overall EU inequality.