The Welfare State and Relative Poverty in Rich Western Democracies, 1967-1997

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  • 1 January 2004
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      • Published in RePEc
Abstract
This study investigates the relationship between the welfare state and poverty with multiple measures of the welfare state and poverty in an unbalanced panel of 18 Western nations from 1967 to 1997. While addressing the limitations of past research, the analysis shows that social security transfers and public health spending significantly reduce poverty. Less robust evidence exists that social wages reduce poverty, while public employment and military spending do not significantly affect poverty. The welfare states effects are far larger than economic and demographic sources of poverty. The significant features of the welfare state entirely account for any differences in poverty between welfare state regimes, and these features have similar effects across welfare state regimes. The welfare states effects on poverty did not change in the 1990s. Sensitivity analyses show the results hold regardless of the U.S. cases. The welfare state emerges as the primary causal influence on national levels of poverty.
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