Social Assistance and Minimum Income Benefits: Benefit Levels, Replacement Rates and Policies across 26 Oecd Countries, 1990–2009
| Author | Jinxian Wang,Olaf van Vliet |
| DOI | 10.1177/138826271601800401 |
| Published date | 01 December 2016 |
| Date | 01 December 2016 |
| Subject Matter | Article |
European Jour nal of Social Sec urity, Volume 18 (2016), No. 4 333
SOCIAL ASSISTANCE AND MINIMUM
INCOME BENEFITS: BENEFIT LEVELS,
REPLACEMENT RATES AND POLICIES
ACROSS 26 OECD COUNTRIES, 19902009
J W and O V V*
Abstract
Until recently, social assistance and minimum income bene ts have rec eived relatively
little attention in the comparative welfare state literature. Relying on two ne w indicators,
this paper examines the development of minimum income bene ts across 26 EU and
other OECD countries. e real bene t level, the rst indicator, is relatively easy to
interpret, but international comparisons require adjustments for exchange rates and
purchasing power, which can introduce variation that is not related to unde rlying
policy changes. In the second indicator, the net minimum income replacement rate,
this disadvantage is cancelled out by con struction. Our analysis shows that real bene t
levels increased in most countries, whilst replacement rates declined on average. A
subsequent qualitative analysis of the changes in the bene t levels con rms that the
increased bene t levels re ect policy changes and that the lower replacement rates do
not re ect bene t cuts, but relatively larger wage increases. Su ch a widening gap between
bene t levels and wages is in line with the policy agen da of ‘making work pay’. Finally,
by analysing the extent to which changes in quantitative indicators re e ct actual policy
changes, this paper seek s to make a methodological contribution to the ongoing debate
on the ‘depe ndent variable problem’ in the welfare state literature.
Keywords: bene t indicators; comparat ive social policy; dependent variable problem;
social assist ance; welfare state reform
1. INTRODUCTION
For many people, social assist ance and min imum income bene t schemes a re importa nt
welfare state program mes. Minimum income bene ts function as a last-resort safety
* Dr. Jinxian Wang is a n Assistant Professor and Dr. Olaf Van Vl iet an Associate Professor in t he
Department of E conomics, Leiden Law School . Leiden University. Address: P.O. Box 9520. 2300 R A
Leiden, email : j.wang@law.leidenuniv.nl and o.p.van.vliet@law.leidenuniv.nl .
Jinxian Wang a nd Olaf Van Vliet
334 Intersentia
net, or as the principal instrument for delivering social protection (Immervoll 2009).
Furthermore, minimum income bene ts are closely connected to other welfare state
programmes, as t he exhaustion of eligibilit y for other transfers, such as unemployment
bene t, may lead to the beginni ng of eligibility for minimum income bene ts (Hölsch
and Kraus 2006). Especially with the return of mass unemployment in Europe a nd
other OECD countries and wit h cutbacks in rst-tier social insurance programmes,
minimum income protect ion has become more important as a safeguard agai nst low
income and poverty (Mar x and Nelson 2013).
Since the welfare state literature pays little attention to socia l assistance and
minimum income bene ts compared to other welfare state program mes, such as
labour market policies and pension schemes, relatively little is k nown about the
actual de velopment of minimum income bene ts. A rst comprehensive international
comparison of social assistance and minimum income bene ts was undertaken by
Eardley et al (1996). ese authors provide a n extensive qualitative and quantitative
analysis of bene t developments across 22 OECD countries between 1980 and 1992.
During the heydays of t he comparative welfare state literature, the second half
of the 1990s and the early 2000s, not much attention was paid to social assistance
and minimum income bene ts. One explanation for this lack of attention might
be that data on other welfare state programmes, most notably, social expenditure
data provided by the OECD, were relatively easily avai lable, whereas data on social
assistance and m inimum income bene ts were not. is period came to an end in
2006, when Nelson publishe d the rst version of the S ocial Assistance and Min imum
Income Protection Dataset. More recently, Van Mechelen et al (2011) published the
CSB-Minimum Income Protec tion Indicators Dataset.
In this paper, we rst provide new empirical insig hts into the developments of
minimum income bene t levels across 14 Western European countries, ve Centra l
and Eastern Europea n countries and seven non-EU OECD countries between 1990
and 2009.1 Relying on data from the Social Assistance and Minimum Income
Protection Dataset (Nelson 2013), we construct two indicators, na mely real minimum
income bene t levels and minimum income replacement rates. ese data have
been analysed in earlier studies (Nelson 20 08, 2010), but not employi ng these two
indicators. Hence, the rst novelty of this paper is that we construct and exam ine
two new indicators of mini mum income bene ts. We focus on the mini mum income
bene t package, which contains mainly social assistance bene ts but also other
allowances, such as child supplements and tax credits. e advantage of using the
real bene t level is that it is relatively eas y to interpret, as it is just the annual amount
of cash bene ts. Nevert heless, comparing bene t levels across countries necessitates
1 In total, the st udy includes 19 EU countries (Austria , Belgium, Czech Republic , Denmark, Estonia,
Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, Netherlands, Poland, Portugal,
Slovakia, Sp ain, Sweden, the United Kingdom) and 7 other OEC D countries (Australia, Ca nada,
Japan, New Zea land, Norway, Switzerla nd, and the United States). Greece i s not included because it
does not have a nation-wide sa fety net (Nelson 2013, OECD 200 9).
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