Minimum Income Schemes in Federal Countries An explanatory analysis of the relationship between the degree of centralization, mobility, benefit levels, effectiveness and efficiency

Abstract

At EU level initiatives are being developed which suggest a movement towards centralization of minimum incomes. To understand whether minimum incomes are best to be organized central or de-central, the relation between the degree of centralization and mobility, benefit levels, effectiveness and efficiency are analyzed. The cases for which this relation was studied were federal countries. The reasoning behind this choice was the resemblance of the EU with a federation. Cluster analysis is used to classify the countries according to their similarities and differences on the variables. Cluster analysis provides a quantitative instrument for a study with a small number of cases. By comparing the clusters of the variables, we are able to determine whether a decentralized or centralized set-up of minimum incomes is indeed accompanied by those characteristics as is suggested in the theoretical framework. The results show that with regard to the degree of centralization a distinction can be made between those with a predominantly decentralized organization of minimum incomes, those with centralized set-ups, and a final group which have some minimum income authorities organized central and other de-centrally. However, a comparison of these clusters with the clusters of mobility, benefit levels, effectiveness and efficiency, revealed little correspondence. None of the formulated hypotheses could be accepted, which lead to the conclusion that the empirical findings of this study indicate that the variables are not related. The results did therefore not provide an answer as to whether minimum incomes are preferably organized at the central or de-central level. However, because of the lack of suitable data more research on this topic is recommended.