Cash Transfers and Guaranteed Minimum Income Programs:
Research, Evaluation, and Policy
Prague, Czech Republic
September 9-10, 2024
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“Beyond the Roof Overhead: An Analysis of Asset Testing Requirements for Minimum Income Recipients in the European Union”
Joanna Mroczka and Daniele Pacifico, Organisation for Economic Co-operation and Development
The paper “Beyond the Roof Overhead: An analysis of Asset Test Requirements for Minimum Income Benefits in the European Union” presents OECD research on asset requirements for minimum income recipients in EU Member States. By analysing detailed policy rules provided by national and local authorities, the paper aims to address knowledge gaps on asset testing as criterion to assess eligibility for and calculate the amount of minimum income schemes.
Eligibility rules for minimum income benefits often include specific requirements for the ownership of assets, including immovable property, financial assets, and durable goods. Such rules are often intended to act as a targeting tool, directing minimum income support towards those with the most limited financial resources. At the same time, asset tests may create administrative hurdles and discourage applications from those who might qualify for assistance. Strict asset testing requirements may also unintentionally exclude some families in severe financial hardship who have assets that cannot be easily monetised.
A deeper understanding of these rules can shed light on the complexity of factors that contribute to issues of non-take up, limited coverage and challenges of accessing minimum income schemes, as well as the administrative challenges associated with asset testing. Additionally, there is no comprehensive framework or guidance for the implementation of minimum income asset testing in EU Member States, and there is also a lack of comparative analysis on asset testing requirements. This results in a wide range of country-specific rules with varying degrees of complexity and unclear effects on benefit entitlements and coverage.
This paper aims to fill this gap by presenting a comprehensive database of asset testing rules in all EU Member States, facilitating cross-country comparisons. It also introduces a novel pseudo scoring system that can be used to group EU Member States that have similar rules for each selected characteristic of the asset test and to order these groups of Member States in terms of the strictness of the selected asset test characteristic. Finally, the paper provides an in-depth analysis of cross-country variations in asset tests for minimum income benefits, identifying four main groups of Member States formed based on similarities in their asset testing approaches. This analysis highlights the substantial variability in the strictness of asset testing requirements across EU Member States and raises policy considerations regarding greater synchronization and guidance for implementing minimum income schemes.