Social Policy or Social Structure?
Income Transfers, Socio demographic Factors and Poverty in the Nordic Countries and in France
The paper compares poverty in Denmark, Finland, Norway, Sweden and France. We have (1) descriptive/analytical and (2) methodological goals.
(1) We pool the four Nordic countries into a single data set and compare France with this “Scandinavia”. The results give strong evidence to the existence of the homogenous Scandinavian model in terms of incidence of poverty, poverty profiles, and the effectiveness of social policy.
(2) The methodological objective is to “change the world” and simulate what would happen if France had the Scandinavian social structure – but its own social policy – and vice versa. Our re-weighting simulations show that the results of the “Scandinavization” of France depend on the method of simulation.
First, a static simulation, changing the socio-economic structure, but preserving the present median incomes and poverty lines as they are, would almost eradicate poverty in France. The „Francofication“ of Scandinavia would lead to dramatic results in Scandinavia: the number of persons totally dependent on social transfers would increase, the effectiveness of transfer systems would decrease, and the poverty rate would rise near to the actual French figures.
Second, in dynamic simulation we also change poverty lines to correspond actual median income (in “Scandi-France” the median income would rise – because of increased female labor force participation – and in “Franco-Scandinavia” decrease – because of lower female employ-ment). In “Scandi-France” the poverty rate would decrease close to the present Scandinavian figures, but the poor would be richer that the poor actually are in France. In “Franco-Scandinavia” the extension of poverty would be about the same as nowadays but the poor would be worse-off than they now are.
In sum, differences in the French and Scandinavian poverty rates are explained by the dynamic interplay between social security and structural variables. However, differences in the family structure and in labor market behavior seem to be more important explanatory factors: about 2/3 of differences between countries are explained by these structural factors, while 1/3 is explained by income transfer systems. However, it is important to remember that these background factors are greatly affected by the institutional set-ups of the welfare states.
