The measurement of the level of protection provided by minimum income programs has often focused on one of two dimensions: adequacy or coverage. The rankings of regions or countries in terms of the protection provided can be very different depending on the chosen outcome. In this paper, we adopt a social welfare approach for measuring welfare protection looking at the effects of adequacy and coverage on economic welfare. Based on standard assumptions of social welfare functions, we propose a parameterized family of indices that satisfy desirable properties. Our empirical illustration using Spanish data confirms that focusing only on standard measures of adequacy may introduce an important bias, making it difficult to properly identify real differences in terms of social welfare among programs.
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Luis Ayala acknowledges financial support from the Ministerio de Economía y Competitividad (ECO2013-46516-C4-3-R and ECO2016-76506-C4-3-R) and Comunidad de Madrid (S2015/ HUM3416). Elena Bárcena-Martín acknowledges financial support from the Ministerio de Economía y Competitividad (ECO2015-63734-P), Comunidad de Madrid (S2015/HUM3416) and Universidad de Málaga. We thank Olga Alonso, Luis Imedio, Coral del Río, Jacques Silber and many seminar participants in Atlanta, Barcelona, Bilbao, Cáceres, Madrid, Ourense, Reus, Sevilla, and York for their helpful discussions and comments.
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Ayala, L., Bárcena-Martín, E. A social welfare approach for measuring welfare protection. J Econ Inequal 16, 41–59 (2018). https://doi.org/10.1007/s10888-017-9361-y
- Minimum income
- Social welfare
- Welfare protection