The optimal design of redistributive systems continues to be a matter of considerable academic and public debate, with the optimal extent and intensity of pro-poor targeting remaining a key issue of contention. This article shows, first, that the overall relationship between pro-poor targeting and income inequality reduction is very weak. Although occasionally the association is positive, it is not robust, very weak, and effectively zero with various reasonable methodological decisions. Second, and more importantly, a detailed disaggregated analysis reveals that the most redistributive systems do contain subsystems that are strongly targeted to the poor by intent and by design. Third, we also show that a disaggregation over the function of social transfers is very relevant: old-age benefits are an important driver of the weak overall association, while for family benefits we find a positive relationship. Absolutely key, however, is our finding that means-tested systems play a crucial role in bringing about redistributive effectiveness, even if their relative size is small. We thus shed new light on the politics of targeting. While it remains important that broad sections of the electorate benefit from social transfers, strong pro-poor targeting within such a context is possible and indeed essential for real redistributive impact. Benefits for the poor need not be poor benefits if and when these are embedded in benefit systems that meet wider redistributive needs and rationales.

Recent studies find in-work poverty to be a pan-European phenomenon. Yet in-work poverty has come to the fore as a policy issue only recently in most continental European countries. Policies implemented in the United States and the United Kingdom, most notably in-work benefit schemes, are much discussed. This article argues that if it comes to preventing and alleviating poverty among workers, both the policy options and constraints facing Continental European policymakers are fundamentally different from those facing Anglo-Saxon policymakers. Consequently, policies that work in one setting cannot be simply emulated elsewhere. We present microsimulation derived results for Belgium to illustrate some of these points. Policy options discussed and simulated include: higher minimum wages, reductions in employee social security contributions, tax relief for low-paid workers and the implementation of a stylised version of the British Working Tax Credit. The latter measure has the strongest impact on in-work poverty, but in settings where wages are compressed, as in Belgium, a severe trade-off between coverage and budgetary cost presents itself. The article concludes that looking beyond targeted measures to universal benefits and support for employment of carers may be important components of an overall policy package to tackle in-work poverty.

This article looks at the impact of citizenship acquisition on the labour market position of immigrants in Belgium. Citizenship is open to all immigrants with a sufficient period of legal residence, without any language or integration requirements. In that respect, this study is an important complement to existing studies which have mostly focused on countries with strict acquisition rules. Based on Labour Force Survey data for 2008, this study uses probit regression to estimate the static and dynamic employment probabilities and unemployment risks. We find that citizenship acquisition is associated with better labour market outcomes for non-Western immigrants in general. This effect remains after controlling for years of residence since migration, indicating the existence of a citizenship premium in Belgium.

Over the last few years concern for income inequality in Europe has increased remarkably. In this context, taxation is an important redistributive instrument, and we investigate the redistributive role of direct taxes. We focus on the EU-15 countries and the evolution over the period 1998–2008, using EUROMOD, the EU-wide tax-benefit model. The research aim of this paper is twofold. First, we investigate empirically whether there is a link between pre-tax income inequality and redistribution through taxes. Second, we test whether there is a relationship between progressivity and average tax level, the two building stones of the redistributive effect of taxes.

At the European level and in most EU member states, higher employment levels are seen as key to better poverty outcomes. What can we expect the actual impact to be, however? Up until now shift-share analysis has been used to estimate the impact of rising employment on relative income poverty. This method has serious limitations. We propose a more sophisticated simulation model that builds on regression-based estimates of employment probabilities and wages. We use this model to estimate the impact on relative income poverty of moving towards the Europe 2020 target of 75 percent of the working-age population in work. Two sensitivity checks are included: giving priority in job allocation to jobless households and imputing low instead of estimated wages. This article shows that employment growth does not necessarily result in lower relative poverty shares, a result that is largely consistent with observed outcomes over the past decade.

To what extent can a country’s effectiveness in reducing child poverty be attributed to the size of family cash transfers (that is, both benefits and tax advantages) or to their design? In this paper, we disentangle the importance of each of these two factors, focusing on the family support system in Lithuania and comparing it with four other new member states. Both single parent and large families are increasingly susceptible to poverty in Lithuania. This contrasts with other former communist countries, namely Estonia, Hungary, Slovenia and the Czech Republic, which protect these family types much better. This paper examines whether their family transfer systems would achieve similar results in Lithuania. We employ the EUROMOD microsimulation tax-benefit model to swap family policies across countries and test whether size or design has greater effects on child poverty reduction in Lithuania. Hungarian, Slovenian and Czech policies would considerably improve the poverty situation among large families. Single parent families would only gain if Lithuanian spending on family transfers increased radically. Estonian policies would lead to mixed results: small gains for large families and losses for single parent families.