How efficient is welfare for families? Evidence from European countries

ABSTRACT

Applying a two-stage Free Disposal Hull (FDH)/Tobit approach to a sample of 23 European countries, we find that the efficiency of social expenditure for families is positively correlated to per-capita GDP, population size, the education level of people, the weight and the ethics of the public sector.

KEYWORDS:

• Efficiency of social expenditure for families
• non-discretionary factors
• non-parametric analysis
• European countries

JEL CLASSIFICATION:

• H11
• H53
• I38

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ We use both Eurostat and OECD (Family database and SOCX database) data to expand the set of socio-economic variables. The 23 countries considered in the analysis represent the set of the common countries in the various datasets.

² See previous references on female participation and fertility.

³ Population under 16 at risk of poverty or social exclusion (abbreviated as AROPE under 16) is defined by Eurostat as the sum of persons under 16 who are either at risk of poverty, or severely materially deprived or living in a household with a very low work intensity.

⁴ According to the OECD equivalence scale.

⁵ We calculate the complement to one of the variables population under 16 at risk of poverty and social exclusion.

⁶ In the Eurostat and OECD databases, the per capita social expenditure is calculated considering the total population. However, we think that this data could underestimate the real amount of benefits provided to families. We calculate per-capita expenditure dividing social expenditure for families by the number of potential beneficiaries (not by total population). This last variable is estimated by multiplying the number of families (couples and single parent families) by the average composition of families (couples and single parents).

⁷ The first PC is the only PC with eigenvalue greater than 1, namely 3,3.

⁸ Per-capita GDP: 2011–2015 average (Source: OECD); population: 2011–2015 average (Source: Eurostat); share of bachelors in population: 2011–2015 average (Source: Eurostat); public/private mix: ratio between public and private social expenditure (Source: OECD SOCX, average 2006–2015); universality degree: ratio between in-kind benefits and total social benefits (cash and in kind), (Source: our elaborations on OECD data average 2011–2015); corruption: CPI/per-capita GDP)*100,000 (Source: https://www.transparency.org/research/cpi/overview); Ethics and Corruption/per capita GDP (Source: http://reports.weforum.org/global-competitiveness-report-2017-2018/).

⁹ The p-value of the GCI corruption variable is around 10%.