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Assetstesting in Social Assistance Programmes

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Are the Welfare states moving towards 'savefare' ... From the song 'Mockingbird' by Eminem. Research Group for Inclusive Welfare Policies ... – PowerPoint PPT presentation

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Title: Assetstesting in Social Assistance Programmes


1
  • Assets-testing in Social Assistance Programmes
  • Are the Welfare states moving towards savefare?
  • Presented to OECD seminar Life Risks, Life
    Course and Social
  • Policy (31.5-1.6.2007
  • Professor Ivar Lødemel

2
  • And your mom was saving money for you in a jar.
    Tried to start a piggybank for you so that you
    could go to college. Almost had a thousand
    dollars, until someone broke in and stole it. And
    I know it hurt so bad it broke your mammas
    heart.
  • From the song Mockingbird by Eminem

3
Outline
  • Present the main terms and issues
  • The role of assets testing in the Welfare State
  • Outline possible effects on saving behaviour
  • Tentative comparison of means testing in a select
    number of OECD Member Countries, including
    changes in the 1994-2006 period
  • Discuss the extent to which changes are related
    to an increased emphasis on the need to promote
    saving
  • Speculation about future scenario

4
Key terms and concepts
  • Social assistance
  • Institutions of curtailment
  • Work house test (today ideal type workfare?)
  • Less elibility (today low benefits and strict
    means test)
  • Means test
  • Earnings and other income (such as Child Benefit)
  • Assets

5
Why focus on social assistance
  • Assets-based initiatives focus on the poor
  • The means test if often stricter in social
    assistance than in other means tested programmes
  • From life course perspective means testing in
    social assistance has greater implications than
    in for example old age pensions
  • Lack of comparative studies following great
    changes in s.a. over the last decade

6
The means test in the Welfare State
  • The hatred of the means test in the poor laws
    facilitated transition to modern welfare states
  • Great variations in the use of means testing
    across welfare states (Australia vs Nordic)
  • Highlights contradiction of the two aims of s.a.
  • Makes sense in ensuring lowest safetynet function
  • Resulting asset stripping in conflict with
    help-towards-selfhelp

7
Arguments for means testing (in sa)
  • Benefits targeted at poor are more effective in
    closing poverty gaps than are universal
    programmes
  • ..a comprehensive approach to poverty reduction
    calls for a program of well targeted transfers
    and safety nets.. (World Bank 1990)
  • OECD Jobs Study (1994)
  • Dependency argument (Malthus and Murray) avoid
    exposing people to welfare

8
Aguments against a strict means test
  • Dependency (Mead) discourages thrift and self
    help
  • Poverty traps (asset traps)
  • Inability to save for a rainy day
  • Intrusive enquiry and stigma
  • Low take-up
  • Social divisiveness
  • Undermines social capital (Rothstein)
  • High administrative costs
  • Poor relief rather than furthering self-reliance

9
Review Tentqtive on effects of assetstest on
saving
  • Review of (some) 30 studies
  • Majority of studies conclude with negative effect
  • Few studies comparing systems with different
    assets test
  • US study 1995 found different saving in states
    with different rules (Powers 1995/1998)
  • Vast majority of studies from the US
  • Saving is more important than in Europe
  • Much research closely related to ABW
  • Lacking cross national comparison

10
Means testing in OECD Member Countries1994
(Eardley et al 1996)
  • Strict Austria, Switzerland, Norway, Sweden,
    Japan
  • Less strict English speaking countries
  • Eardley An unlikely mix of countries

11
Changes in allowable incomefrom earnings and in
assets 1994-present
  • Canada (Ontario)
  • Earnings from CD 143,- plus 25 of above to 50
    of all earnings (2006)
  • Assets Car, savings for childrens education
    (RESP)
  • USA
  • Earnings Exemptions remain low (up to poverty
    level)
  • Assets Connecticut eliminated assets test for
    families with children. In general exemptions of
    USD 1-2000,-
  • UK
  • Earnings still low disregards
  • Assets exemption was unchanged 1994-2006, now
    doubled to pounds 6000,-

12
Changes in other nations (examples)
  • Denmark Earnings disregard for recipients on
    activation
  • Finland 20 of earnings (up to Euro 150)
    disregarded
  • Norway Increased earnings disregard for people
    on activation

13
Tentative asessment of changes
  • Observed changes mainly related to earnings
  • This corresponds with emphasis on activation and
    transition to work
  • Less change with regard to assets
  • More nations disregard child benefits (child
    poverty)
  • No evidence to suggest that the growing interest
    in assets-based welfare has resulted in greater
    changes in ABW-nations (possible exception
    Canada)

14
DiscussionSavefare as 3rd generation activation?
  • Activation generic for ALMP for the poor..
  • Workfare An offer you cant refuse
  • Trainfare An offer.. (u shouldnt ref..)
  • Savefare An offer (that seems to good to
    refuse?)
  • Elements of what may become savefare
  • Assets-based programmes for s.a. recipients
  • Assets exemption only for participants
  • Determines use of saved assets (paternalistic)
  • Compulsory training for those accepting offer
  • Danger (as with workfare) lots of claims about
    great effects, strong moral (under-)tones in
    advocacy/debate
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