2023/10/17 by Manuel Schechtl, Rourke O’Brien · 1 voice · 6 citations
Economics, Econometrics and Finance · Social Sciences · #Demographic economics #Development economics #Economic growth #Economics #Fiscal Policy and Economic Growth #Fiscal policy #Gender, Labor, and Family Dynamics #Generosity #Income, Poverty, and Inequality #Labour economics #Macroeconomics #Payroll #Political science #Poverty #Public economics #Welfare #Welfare state
paper · pdf · doi:10.1093/sf/soad133
published in Social Forces 102(4), 1249-1268 (Oxford University Press)
openalex publication_date 2023/10/17 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
Abstract This article introduces fiscal impoverishment as a framework for comparative poverty research. We invert standard analyses of welfare state policy and household poverty by focusing not on poverty alleviation but poverty creation and exacerbation. Using harmonized household survey data, we show how the income and payroll taxes most rich countries rely on to finance the public sector serve to push households (further) into poverty. We estimate that across rich democracies on average about one in four households in poverty are made poorer on net after taxes and transfers; with fiscal impoverishment levels ranging from <10% in some countries to more than 70% in others, revealing extreme cross-national variation in how the pocketbooks of poor households are impacted by national tax and transfer policy. We go on to show that fiscal impoverishment does not track with standard measures of welfare state generosity but is instead largely determined by design of income tax systems, particularly a country’s relative reliance on (regressive) payroll taxes versus (progressive) income taxes. We consider the implications of fiscal impoverishment for assessing welfare state performance and for comparative poverty research.