LONGER-TERM TRENDS IN INCOME POVERTY IN THE OECD AREA
This article reviews trends in income poverty in 26 OECD countries, including the most recent trends up to the early 2000s. Despite rather modest changes in overall poverty indicators over the long run, the structure of poverty has shifted over the years in all OECD countries, leading to higher poverty risks among younger age groups and consistently very high poverty levels among single parents - especially if they are without employment. Demographic changes have influenced these poverty trends, but they do not fully account for cross-country differentials. In turn, direct taxes and public transfers play a significant role in reducing market-income poverty, with considerably higher reduction rates in some of the European OECD countries; country differences are especially pronounced in the case of households with children. The poverty alleviation effect of tax/transfers increased in almost all OECD countries during the 1980s and early 1990s but slightly declined over the second half of the 1990s. Notwithstanding the efforts and effects of tax/transfer policies, employment remains a key factor for escaping the risk of poverty, underlining the importance of employment-oriented social policies and labour market policies that help 'make work pay'.
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