ABSTRACT
This chapter analyzes how successful the European Union member states are in reducing poverty through the payment of cash social transfers. Although all components of the micro-simulation are household information, the components were transformed into equivalent components before the micro-simulation was examined. Although the correct method would be to transform these components after the micro-simulation, the latter method could produce a modified average income since the components may refer to different groups. The data used in the analysis are extracted from the User Database of the European Community Household Panels (ECHP), which has been collected for most countries since 1994 by public institutions under the supervision of the Statistical Office of the European Communities. The source for estimating the refund factor is the gross-net factor, which is available in the household files of ECHP. With the exception of the four Mediterranean welfare states, all European countries observed to achieve considerable poverty reduction through the payment of cash social transfers.
