What drives inequality and poverty in the EU? Exploring the impact of macroeconomic and institutional factors

Dafermos, Yannis; Papatheodorou, Christos

Abstract

Employing panel data techniques, we investigate the macroeconomic and institutional determinants of inequality and poverty in the EU over the period 1994-2008. We pay particular attention to the effects of macroeconomic environment, social protection and labour market institutions. The empirical analysis shows that the social transfers in cash, and principally the transfers that do not include pensions, exert a prominent impact on inequality and poverty. Also significant is the effect of the GDP per capita. The impact of employment on inequality and poverty is not empirically sound. The same holds for the labour market institutions; an exception is the union density, which appears conducive to a less dispersed personal income distribution. Importantly, the results support the view that the social protection system acts as a catalyst in determining the effectiveness of social spending and the distributive role of economic growth and employment. © 2013 Copyright Taylor and Francis Group, LLC.

• Journal Article Type: Article
• Publication Date: Jan 1, 2013
• Journal: International Review of Applied Economics
• Print ISSN: 0269-2171
• Electronic ISSN: 1465-3486
• Publisher: Taylor & Francis (Routledge)
• Peer Reviewed: Peer Reviewed
• Volume: 27
• Issue: 1
• Pages: 1-22
• DOI: https://doi.org/10.1080/02692171.2012.696590
• Keywords: inequality, poverty, macroeconomic environment, social protection, welfare regimes, labour market institutions
• Public URL: https://uwe-repository.worktribe.com/output/936049
• Publisher URL: http://dx.doi.org/10.1080/02692171.2012.696590