The state’s anti-poverty effect

Poverty rates are usually a measure of personal income. But how can public services affect relative poverty, that is, when the monetary value of public services, known as “extended income” is brought into the equation? In fact, when public services are taken into account, the poverty rate for 27 OECD countries decreases from 10% to 5%. In Belgium, Ireland and the UK, poverty is reduced by close to 60%, which reflects the value of public services in these countries. The decrease is by about 27% in Estonia and Sweden, where income equality is higher to begin with. While inequality and poverty reduction are not the prime aims of education, health and other in-kind services such as housing and care for the elderly, they do have an impact on income distribution. See full Article.