Scandinavian Working Papers in Economics

Arbetsrapport,
Institute for Futures Studies

No 2005:7: Welfare States, Social Structure and the Dynamics of Poverty Rates. A comparative study of 16 countries, 1980-2000.

Olof Bäckman ()
Additional contact information
Olof Bäckman: Institute for Futures Studies, Postal: Box 591, SE-101 31 Stockholm, Sweden

Abstract: The purpose of this paper is twofold. The primary purpose is to try and explain both the temporal and the spatial variation of poverty rates in terms of unemployment insurance indicators and structural/sociodemographic factors. Secondly, the paper aims to test the 'convergence hypothesis' of the poverty rate, i.e. whether or not poverty rates in modern welfare states have converged in recent decades. The analyses tentatively suggest that structural change in terms of the unemployment rate, the proportion of single-earner households, the female labour-force participation rate, and the proportion of families with children primarily explains the temporal variation in poverty rates. The unemployment insurance factors primarily explain the spatial variation, i.e. variation between countries. In part, however, the temporal variation is explained but the cuts in net replacements in unemployment insurance. This factor alone explains a larger share of the overall variance than all the structural factors put together. Where the convergence hypothesis is concerned, a random-effects model is proposed as a statistical tool for testing convergence (and disperson). The results of this analysis suggest that for the 16 countries and the time frame under review the convergence hypothesis must be rejected, an outcome that is in line with some other analyses presented recently.

Keywords: Welfare States; Social Structure; Poverty Rates

JEL-codes: I30

32 pages, April 2005

Price: 25 SEK

Note: ISSN 1652-120X ISBN 91-89655-65-6

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