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Can Higher Employment Levels Bring Lower Poverty in the EU? Regression Based Simulations of the Europe 2020 Target

Author

Listed:
  • Marx, Ive

    () (University of Antwerp)

  • Vandenbroucke, Pieter

    () (University of Antwerp)

  • Verbist, Gerlinde

    () (University of Antwerp)

Abstract

At the European level and in most EU member states, higher employment levels are seen as key to better poverty outcomes. But what can we expect the actual impact to be? Up until now shift-share analysis has been used to estimate the impact of rising employment on relative income poverty. This method has serious limitations. We propose a more sophisticated simulation model that builds on regression based estimates of employment probabilities and wages. We use this model to estimate the impact on relative income poverty of moving towards the Europe 2020 target of 75 percent of the working aged population in work. Two sensitivity checks are included: giving priority in job allocation to jobless households and imputing low instead of estimated wages. This paper shows that employment growth does not necessarily result in lower relative poverty shares, a result that is largely consistent with observed outcomes over the past decade.

Suggested Citation

  • Marx, Ive & Vandenbroucke, Pieter & Verbist, Gerlinde, 2011. "Can Higher Employment Levels Bring Lower Poverty in the EU? Regression Based Simulations of the Europe 2020 Target," IZA Discussion Papers 6068, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6068
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    Cited by:

    1. Andrea Brandolini & Eliana Viviano, 2016. "Behind and beyond the (head count) employment rate," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 179(3), pages 657-681, June.

    More about this item

    Keywords

    employment growth; poverty; Europe 2020; household work intensity; low pay;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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