Fighting poverty is an important concern in most societies. This usually involves transferring resources to the poor. There exists a widespread view that European countries are much more generous to the poor than the United States. We study whether this is really the case. First, we argue that using data on aggregate spending does not allow us to conclude who the final recipients of social expenditure are. We then analyze microeconomic evidence from the Current Population Survey and the European Community Household Panel and find mixed results. In particular, when the concept of relative poverty is used, we find that every individual below the poverty line receives an average transfer in the United States that is 45% higher than in the European Union. When the old are excluded from the sample, this difference is reduced to 14%.
Friday, August 06, 2010
Is the Welfare State Larger in America than in Europe?
Apparently, and by a considerable amount, according to a new article in International Tax and Public Finance (I couldn't find an ungated copy). I haven't read it, but here is the abstract: