Welfare Beats Jobs When It Comes to Poverty Reduction

When it comes to poverty reduction, increasing employment and increasing social spending can both help. But which is the more effective of the two approaches? In this piece, I use data from the OECD to attempt to answer this question. What I find is that social spending is far more effective at reducing poverty than jobs are.

Before we get into the numbers, let’s define our terms here.

Poverty refers to the percent of people with incomes below 50 percent of a country’s median income. For this analysis, I use both market poverty, which refers to how many people are in poverty when only counting income from market sources such as wages and dividends, and final poverty…

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