The Measurement of Targeting Design in Complex Welfare States: A Proposal and Empirical Applications

The extent to which welfare states target resources to the poor and the effect this may have on redistribution and public support remains an important question in contemporary social policy and welfare state research. Usually in this line of research, targeting is measured as the extent of transfers accruing to the lowest income groups. Such an outcome measure depends on both policy design and contextual factors, such as the composition of the population. For some research questions however, researchers may want to separate the effect of the design of benefit schemes, i.e. targeting design, from the context in which targeting takes place. For instance to assess the effect of policy design on redistributive outcomes, or to track whether policymakers resorted to more or less targeting in their benefit schemes over time. Therefore, in this article we develop an institutional targeting indicator that captures the policy intention to target towards the poor. Our indicator summarizes policy design into one parameter, and captures the complexity of benefit design in contemporary welfare states in a meaningful way. Drawing on the OECD Benefits and Wages data that capture the rules and legislation of tax benefit systems, we demonstrate different empirical applications for this indicator.