“Mobility into and out of poverty in 14 European countries” ATHENS UNIVERSITY OF ECONOMICS AND BUSINESS DEPARTMENT OF INTERNATIONAL AND EUROPEAN ECONOMIC STUDIES “Mobility into and out of poverty in 14 European countries” paper presented in EPUNet 2006 Conference Author-Presenter: Eirini Andriopoulou 9th of May 2006

Research Questions Do poverty exit rates differ among the EU Member-States and how much do they depend on the duration of poverty spells? Unconditional and conditional exit probabilities To what extent poverty is recurrent? Re-entry rates to poverty In which income group do the poor find themselves when they escape poverty and what is the evolution of their income in the years that follow the poverty spell? Mobility matrices What are the main events (income, demographic) associated with transitions into and out of poverty? Event analysis

Data User’s Database (UDB) of the European Community Household Panel (ECHP) produced by the Living Conditions Unit (E-2) of the Social and Regional Statistics and Geographical Information System Directorate (E) of EUROSTAT in Luxembourg. Time frame: 1994-2001 (8 waves) Countries: 14 countries (Sweden excluded, Data from national panels for Germany, Luxembourg and the UK)

Definitions Income Reconstruction of the household income, so as to match the timeframe of the income and the other ECHP variables Poverty line 60% of the national median equivalised household income per capita Using: Modified OECD Scale Deflated incomes in ppp Cross-sectional weight Grossing-up factor for EU totals

Source: ECHP UDB (Dec 2003 - 2nd issue)

Time dimensions of poverty Duration Recurrence Spell Analysis Four poverty profiles: Transient: only once and for one year “Mid-term” poor: only once for two years Recurrent: at least twice poor but no more than 2 years Permanent poor: 3yrs+ (Handout: Table 1)

Unconditional entry and exit rates Country Annual exit rate Annual entry rate A 38.07 5.82 B 36.86 6.48 D 38.24 5.19 DK 44.49 6.22 E 39.09 9.54 EL 32.10 9.39 F 32.60 6.55 FIN 33.01 5.60 I 33.75 8.01 IRL 31.45 9.16 L 30.37 4.23 NL 46.24 5.07 P 29.69 7.80 UK 34.13 7.95 _EU 35.27 6.99 Total number of individuals at risk of exiting/entering poverty 140,831 706,259 Source: ECHP UDB (Dec 2003 - 2nd issue)

Conditional probabilities Conditional to the duration of poverty entry probabilities (Handout: Table 2) Re-entry rates to poverty (Handout: Table 3)

In which income group do the poor end-up when they escape poverty?    Country 60%-79% 80%-99% 100%+ Total Number of spell endings A 55.68 21.20 23.12 100.00 1,801 B 62.02 17.62 20.36 1,931 D 60.77 20.62 18.61 3,802 DK 57.76 22.77 19.47 1,285 E 51.22 25.06 23.72 6,673 EL 51.03 25.26 5,008 F 67.07 19.14 13.79 4,072 FIN 62.92 20.57 16.51 1,043 I 51.02 24.34 24.64 6,840 IRL 66.02 19.06 14.92 2,583 L 75.42 16.56 8.01 1,004 NL 57.26 22.08 20.65 2,592 P 58.52 22.52 18.96 5,082 UK 60.40 19.34 20.26 4,156 _EU 58.02 21.67 20.31 47,872

Mobility around the poverty line and among income groups Mobility Indices Mobility Matrices (Handout: Table 4)

Event analysis for poverty spell beginnings and endings The Algorithm of the event analysis Five step analysis (Handout: Figure 1) Equivalised Household Income per Capita

Results Poverty entries (2 categories of events) (Handout: Table 5) Poverty entries (3 categories of events) (Handout: Table 6) Poverty exits (2 categories of events) (Handout: Table 7) Poverty exits (3 categories of events) (Handout: Table 8)

Conclusions Income events more associated both with entries and exits than demographic events. Demographic events are more important in Finland, Denmark, UK and Luxembourg, while income events are stronger in Mediterranean countries. When adding employment events the importance of pure income events declines in many cases more than 20%. Employment events seem to be more related to poverty exits than unemployment events with poverty entries.

Limitations of the Event Analysis Does not allow for multiple events to happen at the same time: identifies only one main event associated with spell beginning/ending Controls only for changes e.g. in social benefits not for level Focuses on micro level It is not a substitute for the multivariate analysis but it supplements it very well

Thank you very much for your presence and attention! Eirini Andriopoulou peace@aueb.gr

Additional – Emergency Tables

Data – Country participation COUNTRIES FULL ECHP DATA FORMAT ECHP DATA FORMAT DERIVED FROM NATIONAL SURVEYS Belgium and Netherlands Denmark, France, Greece, Ireland, Italy, Spain, Portugal 1994-2001 - Austria 1995-2001 Finland 1996-2001 Germany 1994-1996 1994-2001 (GSOEP) Luxembourg 1995-2001 (PSELL) United Kingdom 1994-2001 (BHPS) Sweden 1997-2001 (SLCS) (Cross Sectional Data Only) Source: ECHP UDB (Dec 2003 - 2nd issue) (EPUNet 2004a, p. 1)

Data – Attrition rates Year of Survey Country Wave 1 Wave 2 Wave 3     Year of Survey Country Wave 1 Wave 2 Wave 3 Wave 4 Wave 5 Wave 6 Wave 7 Wave 8 A   0.00 9.64 18.72 26.29 32.82 39.23 43.73 B 7.80 15.34 22.85 30.17 36.97 42.37 48.54 D (SOEP) 5.76 11.29 16.35 22.14 26.77 31.38 35.38 DK 11.20 23.55 33.54 42.53 48.25 52.44 54.87 E 12.33 20.63 29.77 37.45 42.38 47.93 52.05 EL 9.08 16.92 24.20 32.91 40.21 43.86 45.97 F 10.35 16.76 25.49 32.52 37.78 43.39 46.17 FIN 8.33 20.51 28.41 47.76 50.67 I 4.97 9.56 18.22 25.08 30.40 36.10 42.71 IRL 15.97 29.19 36.96 44.08 52.65 62.59 67.48 L (PSELL) 19.47 26.90 33.39 38.90 43.99 47.78 NL 8.30 13.63 20.56 27.79 34.35 42.10 48.94 P 4.32 9.91 15.06 20.31 24.68 28.68 31.80 UK (BHPS) 8.69 13.13 16.79 20.27 23.72 27.30 30.62 Mean 8.53 15.13 23.37 31.30 37.51 44.66 48.38 Mean dif 6.60 8.24 7.93 6.21 7.16 3.72 Source: ECHP UDB (Dec 2003 - 2nd issue)

Data – Cases available for analysis   Year of Survey Country 1994 1995 1996 1997 1998 1999 2000 2001 Total A 9,579 9,249 8,733 8,184 7,739 7,169 6,873 57,526 B 9,149 8,839 8,398 7,916 7,408 6,970 6,560 5,985 61,225 D 16,284 16,682 16,304 15,942 15,251 14,860 14,340 13,969 123,632 DK 7,693 7,200 6,568 6,204 5,666 5,427 5,222 5,136 49,116 E 23,025 20,708 19,712 18,167 16,728 16,222 15,048 14,320 143,930 EL 16,321 15,309 14,384 13,491 12,298 11,654 11,383 11,244 106,084 F 18,916 17,408 16,985 15,758 14,849 14,109 13,368 13,263 124,656 FIN 11,214 10,888 9,973 9,587 7,552 7,498 56,712 I 21,934 21,757 21,506 20,074 19,310 18,621 17,602 16,162 156,966 IRL 14,585 12,577 10,887 9,952 9,000 7,721 6,276 5,565 76,563 L 8,192 6,805 7,093 6,647 6,585 6,184 6,306 47,812 NL 13,029 12,791 12,897 12,584 12,373 12,517 12,446 12,079 100,716 P 14,706 14,826 14,623 14,428 14,085 13,798 13,481 13,285 113,232 UK 12,844 12,508 12,547 12,396 12,432 12,281 12,186 12,051 99,245 168,486 178,376 182,079 173,626 164,204 158,091 148,817 143,736 1,317,415 Source: ECHP UDB (Dec 2003 - 2nd issue)

Poverty indices (year: 2000) Ctry Headcount ratio Poverty gap Square poverty gap Modified Sen index NL 10.39 L 2.22 0.68 4.29 D 11.37 2.52 FIN 0.95 4.87 DK 11.47 0.98 4.89 11.57 2.94 1.19 5.67 12.01 2.98 B 1.34 5.80 A 12.24 3.07 1.39 5.95 14.44 3.19 1.49 6.14 F 15.71 3.93 1.70 7.52 UK 17.18 5.03 IRL 2.01 9.56 _EU 17.77 5.24 2.34 9.80 E 19.46 5.25 2.47 9.97 I 19.54 P 5.75 2.67 10.85 20.09 5.83 2.87 11.02 EL 20.33 6.33 2.93 11.92 20.58 6.36 3.16 11.93 Source: ECHP UDB (Dec 2003 - 2nd issue)

Headcount ratio by age groups   Age Groups Ctry 0-15 16-64 65+ A 12.53 9.17 25.34 B 11.31 11.86 28.41 D 12.94 10.45 13.53 DK 6.19 8.58 32.30 E 25.70 16.78 24.18 EL 17.72 16.94 33.84 F 17.41 13.76 21.43 FIN 5.34 10.15 26.20 I 25.22 18.44 18.58 IRL 22.00 15.92 46.01 L 16.96 11.35 8.55 NL 14.14 10.42 4.26 P 26.84 15.57 31.87 UK 22.66 13.07 25.24 _EU 20.73 15.73 22.68 Source: ECHP UDB (Dec 2003 - 2nd issue)

Poor’s income distribution   Income Group Country 0%-19% 20%-39% 40%-59% Total Number of poor A 7.34 18.84 73.82 100.00 2,024 B 6.01 15.76 78.23 2,154 D 6.05 18.22 75.72 3,947 DK 4.86 19.93 75.22 1,625 E 9.54 22.36 68.11 7,136 EL 10.56 21.34 5,494 F 6.46 17.74 75.79 4,724 FIN 9.84 17.79 72.37 1,643 I 9.97 22.88 67.15 7,052 IRL 3.40 16.78 79.82 3,432 L 2.67 10.81 86.52 1,159 NL 14.90 17.87 67.23 2,718 P 6.13 19.33 74.53 4,848 UK 7.95 22.33 69.72 4,311 _EU 7.96 20.28 71.76 52,267

Household Head by Gender Country male female Total   A 50.89 49.11 100.00 B 72.00 28.00 D 60.48 39.52 DK 58.86 41.14 E 80.69 19.31 EL 76.16 23.84 F 75.41 24.59 FIN 57.43 42.57 I 75.43 24.57 IRL 71.54 28.46 L 69.87 30.13 NL 68.06 31.94 P 69.30 30.70 UK 56.09 43.91 _EU 67.06 32.94

Distribution of poor population to household types   Household Type Ctry 1 2 3 4 5 6 Total A 21.16 14.98 11.60 5.17 26.87 20.23 100.00 B 15.08 22.81 11.15 9.34 31.67 9.95 D 24.27 16.07 11.70 10.49 28.44 9.02 DK 30.55 34.97 9.48 3.39 13.92 7.69 E 3.40 11.95 13.84 3.27 36.27 31.27 EL 23.97 18.14 2.06 25.76 21.05 F 14.06 17.10 10.89 9.08 36.06 12.83 FIN 45.60 14.88 8.37 4.13 21.27 5.75 I 8.19 8.09 17.62 3.48 34.52 28.11 IRL 16.00 5.63 7.45 9.59 43.41 17.92 L 9.23 10.87 10.17 8.14 45.42 16.17 NL 15.98 10.83 10.98 13.32 35.91 12.98 P 8.20 16.88 15.59 4.53 31.49 23.31 UK 18.82 15.07 8.96 16.58 32.85 7.72 _EU 14.52 14.44 12.74 8.57 32.80 16.94