In this commentary, Ive Marx of the University of Antwerp and Stone Center Affiliated Scholar Brian Nolan of the University of Oxford introduce a special issue of the Journal of European Social Policy focused on social policy and wealth.
By Ive Marx and Brian Nolan
Much of the rapidly growing scholarship on wealth focuses on the top, because that’s where the bulk of wealth sits. This is true even in countries with comparatively equal income distributions and extensively redistributive welfare states. Yet even if assets are concentrated among the wealthy, they are also an important factor in the financial health of those who are far less well-off. Some people who are identified as poor or financially needy purely on the basis of income actually have meaningful assets. The fact that they have such assets, or stand to inherit such assets, arguably affects their need for welfare state protection.
Together with 19 fellow sociologists, political scientists, and economists, we have organized and contributed articles for a special issue of Journal of European Social Policy that looks at how wealth matters for social policy scholarship. Many of us are associated with the Stone Center, including Senior Scholars Janet Gornick (who is also the Center’s director) and Salvatore Morelli, and Affiliated Scholars Brian Nolan, Fabian Pfeffer, and Philippe Van Kerm. All of the articles shed an innovative light on wealth in relation to a range of topics relevant for social policy researchers.
With Sarah Kuypers, Ive Marx demonstrates that the elderly are generally less likely to be counted as poor once their assets are taken into account. Richard Rodems and Fabian Pfeffer show for the United States that the level of wealth required to successfully self-insure against income loss due to unemployment or ill health is remarkably high — even if the poor had assets, collective income maintenance provisions would still be absolutely crucial. Salvatore Morelli, Brian Nolan, Juan C. Palomino and Philippe Van Kerm show that one explanation for why low-income households often have little or no wealth is they are less likely to have received wealth transfers from the previous generation. They also show that a universal capital endowment on reaching adulthood — advocated by, for example Branko Milanovic and Thomas Piketty — could help to reduce the number of households with little or no wealth. Janet Gornick and Eva Sierminska demonstrate the importance of increasing women’s labor force participation and earnings, not only as an end in itself, but also to bolster women’s capacity for wealth accumulation.
Alongside the range of new findings it presents, the special issue highlights some notable research gaps that need to be addressed as a priority. Debt is often missing in mainstream research on poverty and wealth, whereas the reports of social workers and those experiencing poverty focus on indebtedness as one of the most serious aspects of poverty. How people in such circumstances cope, and how they perceive and respond to policies intended to help them, needs much deeper investigation. This is also true of the policy interventions now being debated seriously, such as a universal wealth endowment, that might potentially address the wealth deficits and debt problems of low-income households. Raising more revenue from taxing wealth and wealth transfers is now on the agenda in debating how the costs of the Covid-19 pandemic are to be met, but this needs to be broadened to assess how such taxes could also provide a sustainable long-term source of funding for policies aimed at broadening opportunities to accumulate some modest level of wealth. In the same vein, how social protection systems currently means test social transfers for those with any assets, how this serves as a disincentive and barrier to building up any wealth, and how that could be eased are system design challenges that need to be met.
About the Authors:
Ive Marx is a professor at the University of Antwerp and Director of the Centre for Social Policy Herman Deleeck. He is also a Visiting Scholar at the Graduate Center’s Advanced Research Collaborative (ARC).
Brian Nolan is the Director of Employment, Equity and Growth at The Institute for New Economic Thinking and a professor of social policy at the University of Oxford.
See the Issue:
Journal of European Social Policy, Special Issue: Social Policy and Wealth