Income, Deprivation and Economic Strain in the Enlarged European Union. ESRI WP164. November 2005

Whelan, Christopher T. and Maitre, Bertrand (2005) Income, Deprivation and Economic Strain in the Enlarged European Union. ESRI WP164. November 2005. [Working Paper]

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Abstract

At risk of poverty indicators based on relative income measures suggest within the enlarged EU that societies located at quite different points on a continuum of affluence have similar levels of poverty. Substantial differences in levels of income between societies do not in themselves invalidate this approach. However, the relative income approach fails to capture the fact that between economic cluster differences in life-style deprivation are sharper at lower income levels. Support for the argument relating to restricted reference groups is found in relation to the contrast between the twelve most affluent EU countries and all others. The limitations of relative income poverty lines have little to do with the process of enlargement as such. Instead the major problem involves the weak association between income and deprivation in the more affluent countries. However, as a consequence of such difficulties, such indicators do not provide entirely meaningful comparisons of levels of disadvantage across economic clusters. The current analysis, rather than supporting the alternative of a focus on absolute income or an EU wide poverty line, suggests that we should take the argument for adopting a multidimensional approach to the measurement of poverty more seriously.

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