Application of the Institute of Income Redistribution in the Form of Social Transfers in EU Countries

Abstract

The reduction in the number of households living at risk of poverty is a common objectiveof EU countries but the social policy of each member state is different. This paper providesan overview of components of social transfers and their share in total household incomesin EU countries. The aim of the paper is to assess the effectiveness of the social systemsof each on the basis of the number of households at risk of poverty determined beforeand after the payment of social benefits. Four segments of EU countries were identified incluster analysis according to their approach to social transfer settings using primary datafrom EU-SILC survey. The combination of high share of social benefits and low share ofold age pensions proves to be better in the fight against poverty. The relationship betweenan economic performance and a functioning social policy system appears in EU countries.