Structural public balance adjustment and poverty in Europe.

• The relation between structural public balance adjustment and poverty is explored. • Poverty is measured through the AROPE indicator following the threshold approach. • An error correction dynamic panel data technique is employed. • Results suggest that restrictive measures increase poverty and social exclusion. • The results are valid both for the whole population and for men and women separately. After the 2007 financial crisis, some Eurozone countries were subject to adjustment programs, whose main content was the reduction of public expenditure in its structural component. The aim of the paper is to examine, through an error correction dynamic panel data technique, the relationship between structural public balance adjustment and poverty in selected Eurozone countries in the period from 2005 to 2015. The results suggest that restrictive measures increase poverty and social exclusion while expansive measure decrease it, eithe r when considering the population as a whole or when considering men and women separately. The introduction of additional variables considered to be relevant for poverty into the empirical model does not change the main conclusions of the paper. The objective of sound public finance seems to be gained at the expense of a higher number of people living in poverty. [ABSTRACT FROM AUTHOR]