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Individual Employment, Household Employment and Risk of Poverty in the EU. A Decomposition Analysis

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  • Vincent Corluy
  • Frank Vandenbroucke
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    Abstract

    In this paper we explore missing links between employment policy success (or failure) and inclusion policy success (or failure), relying on the EU Labour Force Survey (EU LFS) and the EU Survey on Income and Living Conditions (EU SILC). At the inclusion side of the equation, our focus is on the share of individuals at risk of poverty in the 20-to-59 age cohort. The analysis proceeds in two steps. The first step considers the distribution of individual jobs over households, thus establishing a link between individual employment rates and household employment rates. Following the work by Gregg, Scutella and Wadsworth a ‘polarization index’ is defined in terms of the difference between, on the one hand, the hypothetical share of individuals living in jobless households assuming that individual employment is distributed randomly across households, and, on the other, the actual share of individuals living in jobless households. Actual changes in household joblessness are decomposed in (i) changes due to changes in polarization and (ii) changes due to changing individual employment rates and changing household structures. The second step in the analysis decomposes changes in the at-risk-of-poverty rates on the basis of (i) changes in the poverty risks of jobless households, and (ii) changes in the poverty risks of other (non-jobless) households; (iii) changes in household joblessness due to changes in individual employment rates and changing household structures (changes one would expect if no changes in polarization would occur) and (iv) changes in polarization. The proposed technique does yield interesting insights into the trajectories that EU welfare states have followed over the past ten years.

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    Bibliographic Info

    Paper provided by Herman Deleeck Centre for Social Policy, University of Antwerp in its series Working Papers with number 1206.

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    Date of creation: Jun 2012
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    Handle: RePEc:hdl:wpaper:1206

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    Web page: http://www.centreforsocialpolicy.eu
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    Keywords: at-risk-of-poverty rate; convergence across EU; jobless and work-poor households; polarization of employment;

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    References

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    1. Paul Gregg & Rosanna Scutella & Jonathan Wadsworth, 2010. "Reconciling workless measures at the individual and household level. Theory and evidence from the United States, Britain, Germany, Spain and Australia," Journal of Population Economics, Springer, vol. 23(1), pages 139-167, January.
    2. Sala-i-Martin, Xavier, 1994. "Regional Cohesion: Evidence and Theories of Regional Growth and Convergence," CEPR Discussion Papers 1075, C.E.P.R. Discussion Papers.
    3. Joachim R. Frick & Kristina Krell, 2010. "Measuring Income in Household Panel Surveys for Germany: A Comparison of EU-SILC and SOEP," SOEPpapers on Multidisciplinary Panel Data Research 265, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Peter Dawkins & Paul Gregg & Rosanna Scutella, 2002. "The Growth of Jobless Households in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(2), pages 133-154.
    5. Danziger, Leif & Katz, Eliakim, 1996. "A theory of sex discrimination," Journal of Economic Behavior & Organization, Elsevier, vol. 31(1), pages 57-66, October.
    6. Paul Gregg & Jonathan Wadsworth, 2008. "Two sides to every story: measuring polarization and inequality in the distribution of work," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 171(4), pages 857-875.
    7. Cullen, Julie Berry & Gruber, Jonathan, 2000. "Does Unemployment Insurance Crowd Out Spousal Labor Supply?," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 546-72, July.
    8. Frank Vandenbroucke & Koen Vleminckx, 2011. "Disappointing poverty trends : is the social investment state to blame? An exercise in soul-searching for policy-makers," Working Papers 1101, Herman Deleeck Centre for Social Policy, University of Antwerp.
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