Comparing Poverty Indicators in an Enlarged EU. ESRI WP263. November 2008

Whelan, Christopher T. and Maitre, Bertrand (2008) Comparing Poverty Indicators in an Enlarged EU. ESRI WP263. November 2008. [Working Paper]

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Abstract

In this paper, using the EU-SILC 2006 data-set, we seek to explore the extent to which a consideration of welfare regime and socio-economic differences in poverty levels and patterns and variation in the consequences of poverty for economic stress can assist us in making informed choices between alternative poverty indicators. Poverty in the EU is normally defined in terms of income thresholds defined at the level of each member state. However, the enlargement of the EU and the consequent widening of the gap in living standards between the richest and the poorest member states has had the consequence that a country such as Ireland perform poorly in comparison with a number of the New Member States (NMS) despite enjoying obvious advantages in terms of material living standards. Such paradoxical findings have produced a number of different but interrelated responses. The first focuses on the limitations imposed by an entirely national frame of reference. An alternative critique takes as its starting point the fact that low income is an unreliable indicator of poverty. In this paper we seek to explore the strength of both critiques by comparing the outcomes associated with measuring being ‘at risk of poverty’ and consistent poverty at both national and EU levels. Our analysis suggest that it is possible to develop an approach that would allow us to achieve the stated EU objective of assessing the scale of exclusion from minimally acceptable level of standards of living in individual countries while also measuring the extent to which the whole population of Europe is sharing in the benefits of high average prosperity.

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