Association for Public Policy Analysis & Management

Panel: Comparisons in Poverty, Inequality and Income Policy Among Advanced Economies

(Poverty and Income Policy)

The papers in this panel compare measures of wellbeing among advanced economies and over time. Using cross-sectional and longitudinal comparisons, these papers take different approaches to understanding how the complex institutional relationships between families, the market, and the state affect the current and future wellbeing of persons living in them. In absence of an ideal counterfactual, these types of analysis are key to evaluating and informing public policy that aims to reduce poverty and inequality. Each paper involves an in depth comparison based on a careful selection of indicators, income policies, countries and/or time period. The research in this panel develops and tests new methodologies for studying the effect of income policies on poverty and inequality; it investigates the effects of the Great Recession and following austerity policies on poverty; and it studies the long term effects of early life material deprivation on later life wellbeing outcomes. Taken together the papers give insight on what can be gained from cross-national and longitudinal research on poverty and inequality. The first paper study uses longitudinal data from the 1970 British Cohort Study to assess the relationship between different domains of household deprivation and outcomes in adult life. It uses a range of estimation methods to assess the nature of the relationship between material deprivation and future social progress. It finds that deprivation relates to a diverse set of outcome variables. Deprivation has relatively strong ties to non-cognitive skills, mental health and life satisfaction, but only very modest connections to educational attainment and income. The second paper propose a unified micro-simulation micro-econometric approach to study the drivers of cross-national differences in the distribution of income, focusing on the role of tax-benefit systems, employment structures, returns and demographic structures. The method is applied to pre-recession Euromod data for Ireland and the United Kingdom. It finds that the Irish tax-benefit system is more redistributive than the UK’s due to a higher tax progressivity and more generous transfers. The differences are largely attributable to policy differences. The third paper develops a simulation approach to study the effects of income transfers on material deprivation. The method is applied to pre-recession and post-austerity EU-SILC data for Germany, Greece, Poland and the United Kingdom. The results show that income transfers can not only reduce income poverty but they can also substantially reduce the extent and depth of material deprivation. Changes in social transfers will therefore have a two-fold effect on Europe’s poverty reduction target.