Moving in and out of Poverty: the Impact of Welfare Regimes on Poverty Dynamics in the EU. EPAG Working Paper 30, 2002

Layte, Richard and Whelan, Christopher T. (2002) Moving in and out of Poverty: the Impact of Welfare Regimes on Poverty Dynamics in the EU. EPAG Working Paper 30, 2002. [Working Paper]

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Abstract

Though many of the debates around social exclusion and cumulative disadvantage relate to processes that occur across time, there has been relatively little research into poverty dynamics except in a few notable countries such as Britain, the US and Germany. This neglect is almost entirely because of the absence of comparative longitudinal data on income for other countries, but is regrettable given the central importance of this area. By studying poverty dynamics we not only get a better insight into the processes leading to patterns of disadvantage and inequality, but can also understand better the influence of different welfare state regimes on the social risks experienced by different types of individuals and households. The extent to which different national contexts protect their citizens from poverty persistence, or vary in the factors leading to it tells us a great deal about the workings of their socioeconomic systems and welfare regimes. In this paper we use the recent availability of five waves of the European Community Household Panel Survey to outline the nature of poverty persistence and poverty dynamics across a large number of countries. In doing so we ask three important questions. First, is poverty a more common experience when viewed longitudinally rather than cross-sectionally and how is this affected by the income poverty line used? Second, can we identify a tendency toward poverty persistence and does this vary in its extent across countries? Third and lastly, what types of events are more likely to lead to entry into and exit from poverty and does the importance of these events differ between countries? The paper shows that the experience of poverty is far wider than is appreciated from cross-sectional data, but also tends to be more concentrated on a particular population than would be expected from cross-sectional rates. Moreover, the pattern of poverty persistence is congruent with welfare regime theory. The importance of country institutions and welfare regimes is also underlined by the finding that social welfare and market incomes play different roles in poverty transitions across countries and that Southern European, or residualist welfare regimes focus poverty risks on the experience of the household’s primary earner to a far greater extent than do Northern European Welfare States.

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