The Role of European Welfare States in Explaining Resources Deprivation

Abstract

In a previous paper in this journal (Headey et al., 2000) a comparison was made between three so-called 'best cases' of welfare regime types, the 'Liberal' US, 'the 'Corporatist' Germany and the 'Social-Democratic' Netherlands. That paper was based on the ten-year datasets drawn from the national socio-economic panel studies. For this paper we use the unique comparative panel dataset of the European Community Household Panel. At the time of research, only three waves of data covering the 1994-1996 period were available. Instead of three countries representing three different welfare state types as in the earlier paper we cover twelve countries allowing us to distinguish a fourth Southern or Mediterranean welfare regime type and to compare the performance of the four regimes. Compared to the Headey's et al. paper we focus on the comparative analysis of the level of deprivation and pay less attention to income poverty and inequality. Because we consider deprivation to be part of the concept of social exclusion (see also Atkinson et al., 2002) our results also provide evidence on how welfare regimes across the EU cope with social exclusion. The result of the three 'bestcases' study were that the Social-Democratic welfare state performed best on nearly all social and economic indicators that were applied. Looking in this paper on deprivation levels the results are different and it appears that the Social-Democratic welfare state is good in preventing income poverty but performs less well in equalising levels of deprivation. The results also show that the immature Southern welfare states perform worse with respect to preventing deprivation. Trying to explain levels of deprivation by estimating Tobit panel regressions it turned out that the impact of regime type remains significant though limited. Structural disparities between the countries and regimes in terms of economic welfare, the demographic structure, and the employment situation explain most of the variance across countries.

Keywords: poverty, resources deprivation, welfare states, income, panel data, European Community Household Panel

JEL Classification: I32, I38