The effects of cash benefits on poverty - a panel study of 18 OECD countries

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: Methods of poverty eliminations are some of the most researched subjects in development, as well as, public economics. Procedures in which poverty is believed to be best fought have, and will continue to, deviate across countries. In this thesis, the linkages between poverty, elementary macroeconomic variables and cash benefits will be examined. To explore the direct as well as indirect effects on poverty rates, fundamental macroeconomic parameters as unemployment and education are to be included in the models along with parameters covering cash family allowance. The results vary across the models as do the variables of interest. The main variable of interest, the percentage of GDP spent on cash family benefits, does indicate positive effects on poverty reduction. That is, the larger the percentage of GDP allocated to this social benefit, the more probable it is that poverty rates in the country will decrease. The results gained in this thesis regarding the main variable of interest corroborates previous theory and research.

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