Poverty diagnosis and Calendar of Incomes: The "European Community Households Panel" case

We analyse the impact of the measure of the living standard on poverty and inequality diagnosis. Three measures are assessed on the fourth waves of the European Community Household Panel (ECHP). The first one divides the household instantaneous income by the current consumption units. The two others use the annual income instead of the instantaneous one. The difference between the two measures is that one refers to the current consumption units, whereas the other one accounts for the effective presence of each household member during the last twelve months. Poverty and inequality diagnosis on the whole population does not differ significantly between the last two measures. However, it may display important differences when one focuses on specific households, particularly those that are more subject to important changes in household composition. The diagnosis based on an instantaneous measure of income differs significantly from those based on the annual income. Inequalities seem to be more important according to instantaneous income (Gini and Theil Indexes are greater) and poverty more frequent with 9.8% of the households (instead of 8,5 % for annual income) in 1995. The profile of poor households depends on the measure of income. According to the instantaneous income, blue-collar workers represent half of the poor households instead of one third in the case of annual income. At the individual level, poor active workers account for 2.1 millions according to instantaneous income compared to 1.8 millions according to annual income.