Poverty risk of the unemployed in six European countries: why is it higher in some countries than in others?

ABSTRACT

In all European countries unemployed persons face a high risk of relative poverty, but poverty rates vary greatly among EU countries. We analyse to what extent these differences could be explained by a different composition of the unemployed or by differences in the national income distribution functions. Our results indicate that the effects of individual characteristics on the poverty risk are roughly comparable between countries, but the composition of the unemployed is very different, which explains on average half of the cross-country differences in poverty rates.

KEYWORDS:

• Poverty
• unemployment
• European union
• income distribution

JEL CLASSIFICATION:

• D31
• I32

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The responsibility for all conclusions drawn from the data lies entirely with the authors.

² Denmark, the country with the lowest poverty rate, could not be included because the sample size was too small for our estimations.

³ For a summary of these extensions and modifications, see Seeleib-Kaiser (2008).

⁴ The indicator for the work intensity in the household, one of our control variables, is defined in the EU-SILC only for individuals below 60 years of age.

⁵ For the estimation of the distribution parameters, we use the Stata commands smfit written by Jenkins (2004). Estimation results are shown in Table A3.