Income polarization in European countries and Europe wide, 2004–2012[Polarization of the poor: multivariate relative poverty measurement sans frontiers]

Polarization is an interesting additional social indicator for analyzing income distribution across countries, as it captures the phenomenon of ‘clustering around extreme poles’. Income polarization can be closely linked to social exclusion, which is relevant for EU social policy, because combatting social exclusion is a central element of the Lisbon Agenda and the Europe 2020 Strategy. Rising income polarization has been observed outside Europe, but within the EU, polarization is relatively unexplored. This paper provides theoretical insights into this relatively new dimension of income distribution and analyzes trends in income polarization in 28 EU countries and 3 non-EU countries, using micro-data from EU-SILC over the period 2004–2012. Income polarization is rather stable over this period in European countries, and Europe-wide. It was rising among the old EU15 countries in the sub-period 2004–2008, but declining afterwards. The opposite development is witnessed for New Member States. Despite the Great Recession we find quite stable income polarization in Europe.