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UNECE Seminar “The way forward in poverty measurement”

The measurement of poverty and social inclusion in the EU:Achievements and further improvements

Eurostat Unit F/4 Quality of Life

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Definition of poverty and social exclusion - European Council 1975:

“People are said to be living in poverty if their income and resources are so inadequate as to preclude them from having a standard of living considered acceptable in the society in which they live. Because of their poverty they may experience multiple disadvantages through unemployment, low income, poor housing, inadequate health care and barriers to lifelong learning, culture, sport and recreation. They are often excluded and marginalised from participating in activities (economic, social and cultural) that are the norm for other people and their access to fundamental rights may be restricted.”

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EU-SILC – Statistics on Income and Living Conditions (survey)

Topics (variables): Sampling design, household composition Basic characteristics of household members Income, education, labour, health Housing conditions and material deprivation Annual ad-hoc modules

Sampling:

Reference population: All private households and their members Minimum precision criteria for a key indicator (precision of at-risk-

of-poverty rate of 1%) translated in terms of minimum sample size + additional requirement for longitudinal component

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EU-SILC – Cross-sectional and longitudinal components – 4 year rotational panel

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EU-2020 target on poverty & social inclusion

By 2020 at least 20 million people should be lifted out of the risk of poverty and exclusion in the EU (/ 2008)

"At-risk-of-poverty and social exclusion rate” (AROPE) made of 3 components:

Relative component: At-risk-of-poverty rate “Absolute” component: Severe material deprivation rate

(the household cannot afford at least 4 items out of 9) Exclusion (of the labour market) component: People living

in “jobless” households (work intensity ≤ 20%)

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At-risk-of-poverty rate (AROP):

I: Total household (HH) disposable income (Canberra manual) S: “Modified OECD” equivalence scale (1 first adult/HH, 0.5 for other

adults, 0.3 for children < 14) I/S = HH equivalised disposable income

T: Threshold = 60% of the median equivalised disposable income OF THE COUNTRY Relative measure of poverty

AROP is the share of people living in HH for which (I/S) < T

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Severe material deprivation (MD) rate:

Share of people living in HH that cannot afford at least 4 items out of the 9 following: pay rent or utility billskeep home adequately warmface unexpected expenseseat meat, fish or a protein equivalent every 2nd daya week holiday away from homea cara washing machinea colour TVa telephone

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People living in a very low work intensity (LWI) household rateShare of people aged 0-59 living a household:

where adults 18-59 worked less than 20% of their total work potentialduring the past year

E.g.:HH with 3 adults, 1 work FT and the 2 others doesn’t work (1 bread earner, inactive spouse, 1 student):WI = (1+0+0)/3 = 1/3 > 20% not included

Same HH, 1st adult work only PT (half-time):WI = (0.5+0+0)/3 = 1/6 < 20% included

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AROPE: share of people living in HH in at least 1 situation: AROP, severe MD and very LWI - 2011

- Total around 120 million

people on about 500 Europeans (close to 25%)

- Overlaps around:

. 2 groups: 50 million (10%)

. 3 groups: 8 million (1.6%)

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AROPE 2008-2012

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AROP 2008-2012

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Severe MD 2008-201244,1

(1) Eurostat estimates for 2012 (2) Break in time series(3) Provisional data for 2012 (4) 2012: 2011 data

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Very LWI 2008-2012

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Difficulties with the AROP indicator

In time of economic crisis, if the whole income distribution is affected and in particular the median income tends to decrease as, e.g., work incomes decrease, the share of persons belonging to a HH with an equivalised disposable income below the poverty threshold (60% of median) can remain stable or even decrease

In addition the different sources of income are not all hit at the same time by the crisis, e.g. pensioners or other HH with social benefits incomes, protected at least in a first time, can move from below to above the (decreased) threshold

Solution, for the poverty threshold: Instead of using 60% of the current median income Use 60% of the median income of a base year (2008, to be

updated after some time) adjusted for inflation (HICP)

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Evolution of the income distribution - DE

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Evolution of the income distribution - ES

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Evolution of the income distribution - EL

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AROP anchored in time (2008) – 2008-2012

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Other EU-SILC indicators and analyses

Numerous indicators on poverty and inequalities, including elderly and children

Other indicators on health, housing, etc.

Main indicator from the longitudinal component (measured over the 4 consecutive years) = Persistent at-risk-of-poverty: percentage of people under the poverty threshold for the current year and at least 2 out of the preceding 3 years

Other indicators from the longitudinal component on labour transitions, etc.

Availability of the microdata for researchers large scope of cross-sectional and longitudinal analyses

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Persistent at-risk-of-poverty rate: percentage of people under the poverty threshold for the current year and at least 2 out of the preceding 3 years (SILC longitudinal component)

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Early dissemination MD indicators of reference - data collection year N in end N – January N+1

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Mid-term revision of the EU-2020 strategy: revision of MD variables and indicatorsWhole population:

Existing primary MD variables: HH050 Ability to keep home adequately warm HS011-021-031 Arrears HS040 Capacity to afford paying 1 week annual holiday away from home HS050 Capacity to afford a meal with meat, chicken, fish (or vegetarian

equivalent) every second day HS060 Capacity to face unexpected financial expenses HS110 A car

New supplementary MD variables: HD080 Replace worn-out furniture PD020 Replace worn-out clothes by some new (not 2nd-hand) ones

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Mid-term revision of the EU-2020 strategy: revision of MD variables and indicatorsWhole population (continue)

New supplementary MD variables (continue): PD030 Two pairs of properly fitting shoes (including a pair of all-weather

shoes) PD050 Get together with friends/family (relatives) for a drink/meal at least

once a month PD060 Regularly participate in a leisure activity PD070 Spend a small amount of money each week on yourself

Mix of an existing primary MD variable (possibly) and a new supplementary MD variable:

HS090 A computer; and PD080 Internet connection for personal use at home

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Mid-term revision of the EU-2020 strategy: revision of MD variables and indicatorsChildren:

Existing primary whole population MD variables: HH050 Ability to keep home adequately warm HS011-021-031 Arrears HS110 A car

New supplementary whole population MD variable: HD080 Replace worn-out furniture

Mix of an existing primary MD variable (possibly) and a new supplementary MD variable:

HS090 A computer & PD080 Internet connection for personal use at homeNew supplementary children MD variables:

HD100 Some new (not second-hand) clothes HD110 Two pairs of properly fitting shoes (incl. a pair of all-weather shoes)

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Mid-term revision of the EU-2020 strategy: revision of MD variables and indicatorsChildren (continue):

New supplementary children MD variables (continue): HD120 Fruits and vegetables once a day HD140 One meal with meat, chicken or fish (or vegetarian equivalent) at

least once a day HD150 Books at home suitable for their age HD160 Outdoor leisure equipment HD170 Indoor games HD180 Regular leisure activity HD190 Celebrations on special occasions HD200 Invite friends round to play or eat from time to time HD210 Participate in school trips and school events that cost money HD220 Suitable place to study or do homework HD240 Go on holiday away from home at least one week per year

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Other issues

Regionalisation: From 2020 onwards EU Cohesion policy funds will be allocated using, in addition to existing indicators, AROPE and/or some of its components (NUTS 2/1)Use “current income”: studies show that after modelisation (the evolution of) the income distribution based on current income is a good estimate of (the evolution of) the actual income distributionUse of administrative data and possibly partial / provisional administrative as a a trade-off with timelinessRelation with vulnerability / income, consumption and wealth (data matching, small hook / stand alone modules)STiK (also hook modules)

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Links:

http://epp.eurostat.ec.europa.eu/portal/page/portal/income_social_inclusion_living_conditions/introduction

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/People_at_risk_of_poverty_or_social_exclusion

https://circabc.europa.eu/faces/jsp/extension/wai/navigation/container.jsp Then: EU-SILC

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Thank you!

didier.dupre@ec.europa.eu