Existing welfare state indicators focus on inequality, not risk.
New Measures Needed:
This study introduces two novel metrics: risk incidence (how widespread large income losses are) and risk reduction (the extent to which welfare systems mitigate these). Unlike traditional approaches, they require panel data covering twenty-one democracies.
Universal Protection?
The findings reveal that significant income losses impact citizens across all education levels. This shows the broad value of welfare states in protecting against financial hardship.
Tax & Transfer Impact:
Taxes and transfers substantially lower these large losses, though effectiveness differs by country and over time.
Beyond Inequality:
By identifying specific 'triggers' like unemployment or illness that cause income shocks, the research demonstrates how welfare policies target risks traditionally emphasized in social policy discussions.
Practical Significance:
These measures offer a more comprehensive way to assess welfare state performance by capturing its protective functions alongside redistributive goals.
