The impact of the crisis on poverty and socio-economic inequalities in Europe
Keywords:European Monetary Union, Balance of Payments Imbalances, equity, financial crisis
We investigate the factors that have had an impact on poverty rates and inequalities in Europe and enquire about the possibility to reduce them in the future. After a period when some equality had been achieved, the financial crisis and the increase in unemployment that derived from it had a negative impact on poverty and socio-economic inequalities in almost all European countries. The contrasting evidence available for some of them is analysed first One can say that the very factor that sustained some equality before the crisis, i.e., a rather high rate of growth also in peripheral countries, caused the crisis by nourishing a kind of credit-led growth in these countries and produced a negative impact on poverty rates and equity there. Only the welfare state has succeeded in mitigating the negative impact of the crisis on poverty and equity, but at the cost of further burdening public finances, especially in peripheral countries. This casts a shadow on the ability of the welfare state to perform the same role in the future; unless the austerity regime derived from the institutional set-up of EMU and the deflationary policies imposed to tame the crisis are overcome.
Copyright (c) 2020 Nicola Acocella
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