Chrysa Leventi

The Distributional Impact of Austerity and the Recession in Southern Europe

Southern European welfare states are under stress. On the one hand, the recession has been causing unemployment to rise and incomes to fall. On the other hand, austerity has affected the capacity of welfare states to protect those affected. This paper assesses the distributional implications of the crisis in Greece, Spain, Italy and Portugal from 2009 to 2013. Using a microsimulation model, we disentangle the first-order effects of tax–benefit policies from the broader effects of the crisis, and estimate how its burden has been shared across income groups. We conclude by discussing the methodological pitfalls and policy implications of our research.

Poverty and Inequality during the Great Recession in Greece

The severe economic crisis that has been affecting Greece since 2009 is having an unprecedented impact in terms of job and income losses, and is widely perceived to have a comparably significant effect in terms of greater inequality and increased poverty. This article provides an early assessment of whether (and to what extent) the latter is the case. Specifically, it simulates the impact of the austerity (i.e. fiscal consolidation policies) and the recession (i.e. negative developments in the wider economy) on the distribution of incomes in 2009–12, and estimates how the burden of the Great Recession has been shared across income groups. The article concludes by discussing the policy implications of the authors’ research.

Pathways to a universal basic pension in Greece

Although basic pension had failed for years to catch the imagination of policy makers in Greece, the severe crisis raging since November 2009 has caused it to be quickly put on the agenda. In May 2010 the government committed to a harsh austerity programme, aimed at fiscal consolidation, in return for a rescue package easing the sovereign debt crisis. The July 2010 pension reform, a key provision of the austerity programme, provided for the introduction of a near-universal basic pension starting in 2015. This paper explains why, paradoxically, the crisis made a universal basic pension in Greece more realistic. We argue, first, that social insurance pensions may be ripe for path-breaking reform if heavily subsidised in a non-transparent way, and, second, that any progress towards basic income is likely to be gradual, uneven and specific to the national policy context.

Improving poverty reduction in Europe: What works best where?

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.