Poverty in Europe in the mid-1990s: the effectiveness of means-tested benefits

Abstract

This article examines the income maintenance policies of several members of the European Union and three candidate countries: the Czech Republic, Hungary and Poland. It addresses the issue of the effectiveness of these policies and especially means-tested safety nets in alleviating poverty. To assess the effectiveness of the policies, we use data from the Luxembourg Income Study. We analyse the incidence of poverty based on the EU poverty line and poverty reduction for the entire population and vulnerable groups - the unemployed, solo mothers, large families, and the elderly. During the 1990s the poverty rates increased in most countries and for most vulnerable groups. Means-tested benefits assumed growing importance in alleviating poverty, and several countries have improved their schemes to guarantee a minimum income. At the same time reforms have produced diversity in the safety nets across Europe.