Ive Marx

To what extent do fiscal regimes equalize opportunities for income acquisition among citizens

This project employs the theory of equality of opportunity, described in Roemers book (Equality of Opportunity, Harvard University Press, 1998), to compute the extent to which tax-and-transfer regimes in ten countries equalize opportunities among citizens for income acquisition. Roughly speaking, equality of opportunity for incomes has been achieved in a country when it is the case that the distributions of post-fisc income are the same for different types of citizen, where a citizens type is defined by the socioeconomic status of his parents. Intuitively, a country will have equalized opportunity if the chances of earning high (or low) income are equal for citizens from all family backgrounds. Of course, pre-fisc income distributions, by type, will not be identical, as long as the educational system does not entirely make up for the disadvantage that children, who come from poor families face, but the tax-and-transfer system can play a role in rectifying that inequality. We include, in our computation, two numbers that summarize the extent to which each countrys current fiscal regime achieves equalization of opportunities for income, and the deadweight loss that would be incurred by moving to the regime that does.

Ghent revisited: Unemployment insurance and union membership in Belgium and the Nordic countries

The exceptionally high union density rates in Denmark, Finland and Sweden are attributed to a particular form of voluntary unemployment insurance, known as the Ghent system. Heavily subsidized by the state and administered by union funds, it strongly motivates workers to become union members. Belgium has a partial Ghent system: while unemployment insurance is compulsory, trade unions retain an important role in the provision of benefits. Belgian union density is at an intermediate level; but as in other Ghent countries, its level is currently higher than in the 1970s. This article argues that the Belgian institutional set-up provides stronger incentives for manual workers in industry with lower educational attainment and a past unemployment record. In Denmark, Finland and Sweden, the Ghent system recruits workers across different occupations and educational levels. However, its appeal seems to have lessened over recent years, particularly among younger workers.

The Puzzle of Egalitarianism: About the Relationships between Employment, Wage Inequality, Social Expenditures and Poverty

In social policy debates, there are fundamentally different views of links between such key variables as employment, low pay, social transfers and poverty. This paper reviews basic empirical evidence on the validity of these views and the policy prescriptions that follow from them, drawing mainly on cross-country comparative studies. These reveal that clear and striking cross-country correlations prevail, but not, as is often so readily suggested, between low pay (wage compression) and employment performance, or between employment performance and poverty. Instead, results indicate a strong but negative cross-country correlation between the level of social spending and the incidence of poverty, as well as a strong and positive cross-country correlation between the incidence of low pay and the incidence of relative poverty. While the former correlation has become part of the received wisdom in social policy research, the latter is more surprising, as the correlation is not due to a strong link between low pay and poverty at the individual level. In addition, the incidence of low wage employment and social expenditure are also strongly and (negatively) related. We examine these correlations in more depth, particularly the link between the level of social spending and poverty. Since there is such a clear and strong negative link between the level of social expenditure and the level of poverty, it is tempting to think that more social spending offers an easy means of reducing poverty. However, a simple simulation exercise using Luxemburg Income Study data from the mid 90s suggests that putting more money into social transfer systems as they currently exist in the EU would not have a positive outcome on poverty rates in all countries. In the final section of the paper, we briefly summarise the results, and put forward a recommendation for further research.

Employment chances and changes of immigrants in Belgium: The impact of citizenship

This article looks at the impact of citizenship acquisition on the labour market position of immigrants in Belgium. Citizenship is open to all immigrants with a sufficient period of legal residence, without any language or integration requirements. In that respect, this study is an important complement to existing studies which have mostly focused on countries with strict acquisition rules. Based on Labour Force Survey data for 2008, this study uses probit regression to estimate the static and dynamic employment probabilities and unemployment risks. We find that citizenship acquisition is associated with better labour market outcomes for non-Western immigrants in general. This effect remains after controlling for years of residence since migration, indicating the existence of a citizenship premium in Belgium.

The Great Wake-Up Call? Social Citizenship and Minimum Income Provisions in Europe in Times of Crisis

When the 2008 crisis hit, social safety nets in Europe were not in the best of shape. This article examines what, if anything, governments did to adjust minimum income protection after two decades of relative neglect. In view of the hardship brought on by the crisis, this question is of importance in itself. In addition, there is a long-standing interest in the role crises play in re-shaping policies, possibly in a radical way. Building on purpose-collected data for twenty-four European countries, this article shows that many countries introduced supportive measures during the first years of the crisis, particularly in the form of additional benefit increases and more generous child benefits. Behavioural requirements imposed on minimum income recipients were not relaxed but in some countries activation efforts were intensified. Although the evidence shows that the crisis did trigger a response, there is little evidence for a structural change of course towards more adequate safety nets.

Combating In-Work Poverty in Continental Europe: An Investigation Using the Belgian Case

Recent studies find in-work poverty to be a pan-European phenomenon. Yet in-work poverty has come to the fore as a policy issue only recently in most continental European countries. Policies implemented in the United States and the United Kingdom, most notably in-work benefit schemes, are much discussed. This article argues that if it comes to preventing and alleviating poverty among workers, both the policy options and constraints facing Continental European policymakers are fundamentally different from those facing Anglo-Saxon policymakers. Consequently, policies that work in one setting cannot be simply emulated elsewhere. We present micro-simulation derived results for Belgium to illustrate some of these points. Policy options discussed and simulated include: higher minimum wages, reductions in employee social security contributions, tax relief for low-paid workers, and the implementation of a stylised version of the British Working Tax Credit. The latter measure has the strongest impact on in-work poverty but in settings where wages are compressed, as in Belgium, a severe trade-off between coverage and budgetary cost presents itself. The article concludes that looking beyond targeted measures to universal benefits and support for employment of carers may be important components of an overall policy package to tackle in-work poverty.

The Different Faces of In-Work Poverty Across Welfare State Regimes

For a long time in-work poverty was not associated with European welfare states. Recently, the topic has gained relevance as welfare state retrenchment and international competition in globalized economies has put increasing pressures on individuals and families. This book provides explanations as to why in-work poverty is high in certain countries and low in others.

The Dutch ‘Miracle’ Revisited: The Impact of Employment Growth on Poverty

The past decade has been marked by the coming to prominence of social policy doctrines at the centre of which sits the idea that poverty reduction is best achieved through increased levels of labour market participation. A major reference point in the debate is the Netherlands, where a radical policy shift from passive benefit adequacy towards boosting labour market participation was initiated around the late 1980s and where it has been vigorously pursued since. The Netherlands is routinely praised for achieving a meteoric rise in employment, while maintaining extensive social protection and low levels of poverty and inequality. This article shows that unprecedented employment growth during the 1980s and 1990s went accompanied with comparatively small reductions in absolute poverty and a rise in relative poverty among the working-age population. These developments are linked to the main features of Dutch economic and social policy. The article also draws out some general lessons.

The European Union at Work? The European Employment Strategy from Crisis to Crisis*

The European Employment Strategy (EES) emerged in the early 1990s under the influence of an acute rise in unemployment and the introduction of economic and monetary union (EMU). Its purpose is to foster convergence towards lower unemployment and higher employment. This article considers these outcomes over a longer time frame and in a broader geographical context than previous studies have done. Overall, outcomes in the EU‐15 improved and converged since the introduction of EES. Comparisons suggest that these developments do not merely reflect long‐term or international trends. The recent crisis, with deteriorating and divergent outcomes, might signal the start of a new EES cycle.

Can higher employment levels bring down relative income poverty in the EU? Regression-based simulations of the Europe 2020 target

At the European level and in most EU member states, higher employment levels are seen as key to better poverty outcomes. What can we expect the actual impact to be, however? Up until now shift-share analysis has been used to estimate the impact of rising employment on relative income poverty. This method has serious limitations. We propose a more sophisticated simulation model that builds on regression-based estimates of employment probabilities and wages. We use this model to estimate the impact on relative income poverty of moving towards the Europe 2020 target of 75 percent of the working-age population in work. Two sensitivity checks are included: giving priority in job allocation to jobless households and imputing low instead of estimated wages. This article shows that employment growth does not necessarily result in lower relative poverty shares, a result that is largely consistent with observed outcomes over the past decade.