H53 - National Government Expenditures and Welfare ProgramsReturn

The issue of growing income inequality has become a central focus in global economic policy debate. This paper examines the impact of government social spending on income inequality in the 27 member states of the European Union between 2010 and 2020, utilizing regression analysis of panel data. The findings indicate that the level of government social spending reflects the varying fiscal policies on social protection across EU countries, with the largest share allocated to old age expenditures. However, the analysis reveals that old-age government expenditures do not have a statistically significant impact on income inequality. In contrast, increased spending on unemployment benefits and support for families and children is associated with a reduction in income inequality. These results underscore the need to address structural disparities and provide targeted unemployment and family support to ensure adequate living conditions for vulnerable groups.

The social policy of the European Union is focused mainly on the most vulnerable group of citizens. The social instruments that countries use to increase the living conditions and to decrease social exclusion and vulnerability can differ between countries. The submitted paper uses cluster analysis to compare 27 member states of the European Union based on their social policy instruments in 2019. The study analyses the dependence of social policy instruments and household financial vulnerability using correlation and regression analysis. It examines whether higher levels of social benefits and government expenditure result in lower financial vulnerability. However, the results suggest that the financial vulnerability of households is not associated with low benefits. Clusters reporting a low level of benefits recorded a low financial vulnerability of households and vice versa. Results of the correlation and cluster analysis prove that the increase of the first factor (benefits in material need, expenditure on active labour market policy, family benefits, disability benefits) and the third factor (unemployment benefits) are associated with a decrease in financial vulnerability of households.