WP 1 – Facts, figures and dynamics

The main aim of this work package is to obtain a genuinely better grasp of the reality behind the poverty standstill and the surge in income inequality. Are the poverty outcomes really disappointing and, if so, why precisely? Or, did we miss something?

The poverty standstill is usually evaluated on the evolution of relative income poverty. Although these figures are enlightening, several issues deserve further clarification.

• First, does the poverty standstill hold if we disaggregate the poverty figures for vulnerable subgroups such as migrants, youth, women and the low skilled? Because poverty trends are usually assessed between countries, this will also learn something of what happened within countries (Berthoud, 2004).
• Second, how do different subgroups of the population fare under the general increase in inequality and which income components are relevant in this respect?
• Third, poverty is more than merely a lack of income which refers to several mutually reinforcing dimensions of exclusion (Marlier et al., 2007): what do other dimensions of exclusion teach us?
• Fourth, as over-indebtedness has become a major concern during the last years (Mitchell et al., 2005; European Commission, 2008), what can we tell about the relationship between poverty and over-indebtedness?
• Finally, poverty trends over time are usually investigated in a static way. This does not allow to derive conclusions about the dynamics (e.g. what are the determinants of transitions into and out of poverty?) and the nature (e.g. are many individuals poor for only a short period, or are we dealing with a rather small number of individuals poor for a long time?) of poverty.

We will use two European-wide datasets (ECHP and EU-SILC) covering the period 1994-2008, containing both cross-sectional and longitudinal data. We will go beyond the social indicators and describe for all EU member states

1. how poverty rates vary for different subgroups within and across countries;
2. whether the severity of poverty also varies across countries (in particular between countries with similar headcount poverty rates), hereby devoting special attention to the intersection between relative poverty and other dimensions of poverty;
3. the evolution of poverty from the perspective of an EU-wide standard to assess possible convergence between countries;
4. the evolution of income inequality, disaggregated by population subgroups and income components.

Using the longitudinal component of our datasets, we will apply multivariate models and spell analysis to

1. assess whether poverty is persistent, intermittent or transient;
2. examine the determinants of transitions into and out of poverty; and
3. to estimate poverty exit, entry and re-entry probabilities.