Duration of Poverty Spells in Europe. EPAG Working Paper 47, 2003

Layte, Richard and Fouarge, Didier (2003) Duration of Poverty Spells in Europe. EPAG Working Paper 47, 2003. [Working Paper]

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Abstract

The increasing number of waves available form the European Community Household Panel (ECHP) now makes comparative research of poverty dynamics in EU countries possible. In this paper, we use the first five waves of ECHP to examine the structure of spells, their average duration and the determinants of duration. We do so using ordered logit and hazard rate models. The paper seeks to evaluate how well the different welfare states of Europe perform in terms of preventing recurrent and persistent income poverty and what household and individual characteristics influence poverty duration. Because we use cross-national data on longitudinal poverty we are able to increase our understanding of the effect of the institutional context within which poverty occurs. We show that the country welfare regimes strongly influence long run poverty. In particular, countries in the social democratic tradition are found to do a better job of preventing poverty and long-term poverty. Countries in the liberal tradition and southern European countries display much higher rates of poverty and longer durations of poverty spells. Surprisingly, however, the Netherlands is found not to stand up to its social democratic image in term of exits from poverty: exits rates from poverty are low compared to other EU countries. We provide evidence on the efficiency of labour market mechanisms in terms reducing the risk of long-term poverty, and on the effect of the (changing) household context on the poverty risk. Jobless households are not only more likely to become persistently poor, but they are also less likely to exit poverty.

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