Research Notes & Policy Briefs

The financial and economic crisis which struck the EU in 2008 was associated with a sharp downturn in GDP in all countries. The effect on labour markets, however, varied markedly even in countries experiencing much the same decline in output – Germany and Spain being extreme examples, employment being largely maintained in the former whereas large-scale job losses occurred in the latter. This variation can be explained by a number of reasons, including the policy measures taken – or not taken – to maintain jobs and the differing expectations of employers about the likely duration of the recession and the prospects for recovery afterwards. Whatever the underlying reasons, the differences in the repercussions on employment of the recession, in combination with the considerable variation in the level of social support provided to those losing their jobs or working shorter hours, mean that the social effects of the recession are likely to have varied equally widely across countries. Whether they did or did not in reality, however, remains unclear at present since the income data necessary to investigate the social effects in different parts of the EU in detail are not yet available for the period concerned.

The lack of direct data means that much effort has gone into trying to estimate the social effects of the crisis. This paper therefore mainly focuses on what has happened to unemployment and the people who have been affected and on the household characteristics of the people losing their jobs, as they can markedly affect the consequences for income and its distribution across society. Developments during the earlier period of sustained growth and net job creation are also examined to give some perspective on subsequent events.

We compare the distributional effects of austerity measures that have been introduced in 6 EU countries in the period of large government budget deficits following the 2007-8 financial crisis and subsequent economic downturn. We explore the effects of policy changes presented as “austerity measures” in Estonia, Ireland, Greece, Spain, Portugal and the UK, using the EU microsimulation model EUROMOD and the Irish national model, SWITCH. The six countries have chosen different policy mixes to achieve varying degrees of fiscal consolidation. We focus on the first round effects of increases in personal taxes, cuts in spending on cash benefits and reductions in public sector pay across the distributions of household income. There is a range of important conceptual and consistency issues to be addressed when doing such analysis, particularly in a comparative setting. These include how to identify “austerity measures” in a consistent manner, the relevant time periods to consider, the assumptions behind the counterfactual scenarios and the scope of the policies considered. Using a set of common assumptions we find that the burden of fiscal consolidation brought about through changes in components of household disposable income is shared differently across the income distribution in the six countries. At one extreme, in Greece, the better off lose a higher proportion of their incomes than the poor and at the other, in Portugal, the poor lose a higher proportion than the rich. Bringing increases in indirect taxes into the picture can alter conclusions about the overall distributional effect, increasing the cost most for those with lower income and making the overall incidence of the measures more regressive.

This Research Note analyses the socio-economic situation of people with disabilities using EU-level data, notably the EU-SILC variable on limitations in daily activities because of health problems. It examines the way disability varies between men and women and across age groups, and those with different levels of educational attainment, living in 27 EU Member States. It also examines how employment and the risk of poverty and material deprivation differ between people with and without disabilities. It reviews literature on disability policy initiatives and also discusses various important methodological issues, such as the definition and measurement of disability and the comparability of data used.

In addition to bivariate descriptive analyses, multivariate regression analysis is also undertaken to isolate the effect of non-health personal characteristics (age, gender and education). Such multivariate modelling methods help to disentangle the independent impact of disability on the probability of being employed and at risk of poverty from other factors. Sensitivity analysis has also been undertaken with respect to the measure of disability.

Moreover, information from the Survey of Health, Ageing and Retirement in Europe (SHARE) has been used to gain further insights into the proportion of people of 50 and over with disabilities (i.e. activity limitations due to health problems) in the EU countries and their employment situation.  The SHARE data also enables the effect of different forms of disability, in particular, mental disability and physical disability to be examined.

Outline of analysis

In an attempt to indicate the relative importance of factors underlying disability, a series of descriptive results are presented first which show how the prevalence of disability varies by age, gender and education in each EU country (Section 2). Here, while recognising that the answers to the question ‘activity limitations due to health reasons’ may be affected by different national interpretations, the focus has been on examining the characteristics and circumstances of the people reporting being limited.

Next, we examine the employment position of persons with and without disabilities by age, gender and education characteristics and see how it varies across EU Member States (Section 3). These analyses are then supplemented by discussing how at-risk-of-poverty rates and material deprivation rates differ across those with and without disabilities in EU countries (Sections 4 and 5). Section 6 sheds further light on the prevalence of disability in 12 EU countries by using SHARE data. It provides differences with respect to limitations in physical health and mental health and in employment. Section 7 summarises and provides some policy implications linked to findings of this Research Note.

Population ageing remains a long-term common challenge for many European countries, although its magnitude, speed and timing vary across European countries (Lanzieri 2011). The life expectancy gains, combined with falling fertility levels, imply that the cohorts of elderly are growing in size relative to the cohorts of working population supporting them. The potential implications on the size and shape of public services and finances as well as on the future growth and on living standards are considerable, with varying extent of challenges faced by different EU member States (Economic Policy Committee 2009a; 2009b). A change is therefore called for in public policies and institutions as well as in individual behaviours towards extending working lives and also continuing to contribute to society through other unpaid non-market productive activities (for example through volunteering and family care work) during old age.  This challenge has a particular urgency since the working age population in most EU countries may start shrinking as the large baby boom cohorts reach retirement age. The growth in working-age population in many EU countries already depends increasingly on migration.

In order to understand better the emphasis on the active ageing phenomenon, a useful distinction need to be made between ‘chronological ageing’ (i.e. a change in age that people of all ages experience, say, from cradle to grave) and ‘social ageing’ (which is a social construct involving expectations as well as institutional constraints towards how older people act as they age).  The active ageing movement links specifically with the social ageing phenomenon in which, with rising life expectancy on average, older people are expected to continue to participate longer in the formal labour market as well as in other productive activities. In the spirit of promoting longer active lives, the active ageing agenda calls for a higher retirement age and adjustments in the work environment adapted to the ageing workforce. For example, László Andor, Commissioner for Employment, Social Affairs and Inclusion has noted that ‘the key to tackling the challenges of an increasing proportion of older people in our societies is “active aging”: encouraging older people to remain active by working longer and retiring later, by engaging in volunteer work after retirement, and by leading healthy and autonomous lives’ (Commission of the European Communities, 2011, pp. 8).  Box 1 provides a formal definition of active ageing, which comes from WHO’s Ageing and Life Course Programme, included in the document to the 2nd World Assembly on Ageing, Madrid, April 2002 (World Health Organisation, 2002).

The research note analyses the occurrence of risk-of-poverty and deprivation among the migrant population and the characteristics of those concerned. It explores the factors underlying the higher risk of poverty generally experienced by migrants across the EU, including labour market participation and household composition. The analysis is based primarily on the EU-SILC and defines migrants in terms of their country of birth distinguishing between those born in another EU country and those born outside the EU.

Our focus is on the situation of migrants in their recipient country, thus we do not address the issues related to the sender country, including the issue of remittances. We explore the social exclusion of the migrants themselves and do not address the impact of the presence of these migrants on the domestic labour market. We focus only on migrants present in the country of residence, and not on potentially other family members elsewhere.

Assessing the likely social impact of the economic downturn that has been faced by European countries since the end of 2008 is not straightforward. The consequences of the crisis for the most vulnerable individuals depend on the interaction between their labour market participation, living arrangements and the capacity of the tax and benefit systems to absorb macro-economic shocks.

As unemployment rises it is important to understand the extent to which the incomes of the new unemployed are protected by tax-benefit systems. While unemployment benefits in many countries are earnings related and intended to support individual incomes in a relative sense (Figari et al., 2011), it is also relevant to establish to what extent the household incomes of the new unemployed remain above the poverty threshold.

Our aim is not to make predictions about poverty risk in general, but to test the resilience of the welfare state with respect to one aspect of the downturn: unemployment and the consequent loss of income. Our analysis is not a forecasting exercise, which would need to take account of non-labour market aspects of the downturn such as those related to the financial crisis as well as other labour market effects such as reduced working time and reduced wages. A full analysis would also require some linked macro-micro modelling. Instead, this exercise allows us to illustrate the variation in social impact of potential scenarios across countries and social protection systems (Atkinson, 2009).

There is a growing recognition across the EU that having access to a bank account and the financial services that banks and other financial institutions provide, including credit facilities, is, in many countries, a necessary condition for social inclusion. It is equally the case that the countries in which this is so are tending to increase over time as their financial systems become more developed. There is a question, however, as to how far financial exclusion, in the sense of not being able to access or use ‘financial services in the mainstream market that are appropriate to (people’s) needs and enable them to lead a normal life in the society in which they belong’ (European Commission, 2008) is an independent cause of social exclusion rather than a symptom of it. People who have difficulty in obtaining a bank account or access to credit, therefore, tend to be those who are out of work or who have particularly low levels of income, which are independent causes of social exclusion. Moreover, as financial systems develop, it is in the interest of banks and other similar institutions to offer their services to a widening proportion of the population since this is the way in which they can expand their deposits and, accordingly, their income and profits.

The concern here is to examine the extent of financial exclusion across the EU on the basis of the data collected by the EU-SILC module for 2008 which contained a set of questions relating to this issue. The questions covered whether or not the households concerned had a bank account and a credit or store card and, if not, the reasons for this. The analysis of the responses and of the characteristics of those without access to a bank account or a credit card focuses on the individuals living in the households concerned, including the children where relevant, rather than the households as such since all of the people involved are affected by a lack of access to credit, just as they are by a low level of income or not being able to afford certain goods or services.

The economic recession which followed the financial crisis which began in 2008 and the job losses which it gave rise to, coupled with a continuing squeeze on credit, has triggered concerns that a substantial and growing number of households would have difficulty managing the debts which they built up in the years leading up to the crisis. There is some evidence in the countries hit hardest by the recession, which are also to a large extent those which experienced the biggest build-up of household debt before the crisis, that this indeed has occurred. The concern here is to examine the extent of this accumulation of consumer debt across the EU, the form which it has taken and the extent to which it has been associated with problems of servicing interest charges and debt repayments among the households concerned, especially as the financial crisis has reduced the possibility of rolling over debt, or of accessing new sources of borrowing to cover existing loans.

The concern is also to examine the types of household which are likely to become over-indebted in the sense of having difficulty in servicing their outstanding loans in terms of their income level and other characteristics – the age of the people concerned and the extent to which they have children, in particular. This is based on the special ad hoc module included as part of the 2008 EU-SILC which contained questions on indebtedness and the amount of credit which households have outstanding as well as on access to bank accounts, credit cards and other sources of borrowing. It included, in addition, questions on the underlying reasons for households getting into debt and the extent to which it is associated with a sudden drop in their income, the responses to which are also considered here. 

To explore how people perceive the current social situation and trends a new Eurobarometer questionnaire was developed to examine people’s satisfaction with the following domains: (1) their personal situation, (2) the national economic situation and the socio-economic environment in their country, and (3) the social policy situation. The questions in each domain refer to an evaluation of the current situation, past experiences and future expectations. The first survey to contain the newly developed questions was carried out in 2009 (EB 71.2),2 and this was followed by a second wave in 2010 (EB 73.5), though previous Eurobarometer surveys also contained some questions that appear in the new set. Henceforth, the same set of questions will be asked every year in order to monitor social climate.

In this research note, our aim is to work out subjective indicators that are suited to the measurement of the social climate. The term ‘social climate’ is used to refer to the aggregated ‘mood’ within a society (by analogy with weather and temperature). We are interested in what social concerns are on the minds of most people, as well as in what they think about their own country’s economy and policy efficiency, and about the position of their household. In this essay, in addition to examining aggregated country-level data, we take steps to analyse the micro data and to formulate suggestions for measuring and reporting social climate.

2 and this was followed by a second wave in 2010 (EB 73.5), though previous Eurobarometer surveys also contained some questions that appear in the new set. Henceforth, the same set of questions will be asked every year in order to monitor social climate.

In this research note, our aim is to work out subjective indicators that are suited to the measurement of the social climate. The term ‘social climate’ is used to refer to the aggregated ‘mood’ within a society (by analogy with weather and temperature). We are interested in what social concerns are on the minds of most people, as well as in what they think about their own country’s economy and policy efficiency, and about the position of their household. In this essay, in addition to examining aggregated country-level data, we take steps to analyse the micro data and to formulate suggestions for measuring and reporting social climate.

The financial crisis which struck the EU States in 2008 and the economic recession which followed it led to a decline in GDP, job losses and a reduction in the disposable income of households in virtually all Member States in 2009. The fall in employment and income, though widespread across the economies concerned, affected some sectors of activity and the workers employed in them much more than others. Accordingly, it had differential effects on social groups and, almost certainly, on the distribution of income. Just what these effects were, however, and which social groups, and households, were most affected remains unclear.

The concern here is to examine the evidence which exists at EU level on developments in the different Member States which are likely to have affected household income in order to gain an initial insight into the possible consequences for the risk of poverty across the Union. The evidence in question comes from the European Labour Force Survey which collects information from households on employment and a range of related aspects, though not income, and which is much more up-to-date than the EU-SILC. More specifically, the aim is to examine the LFS data for 2009 in relation to those for 2008 in order to identify the changes between the two years in variables which have implications for household income. These are, in particular, increases in unemployment and inactivity among those of working age, which signify that the people in question are no longer receiving earnings from employment which contribute to the income of the households in which they live. This information is supplemented by data on the household circumstances of the people concerned in order to identify those who are living in households where noone else of working age is in employment. These, accordingly, are especially vulnerable to income falling below the poverty threshold if they lose their their job and the household’s only source of income from employment comes to an end.

The risk of poverty, defined as having disposable income of less than 60% of the national median, is one of the main indicators used in the EU to indentify and monitor social exclusion. However, the existence of such a risk can for many households be a temporary state of affairs, a consequence of a sudden drop in income, which might, for example, be associated with someone in the household losing their job or taking time off work for educational or caring reasons. The effect on income might last only for a few months but it might be sufficient to push the annual income of the households concerned below the poverty line. In these circumstances, it is doubtful whether the people living in the households are at serious risk of social exclusion, even if they are defined as being at risk of poverty according to the indicator. Such people are hard to identify from the annual EU-SILC data and the only way of doing so is through the use of longitudinal data which are also compiled by the survey and which indicate the income situation of households over a number of years – in practice, up to four years. These data, therefore, provide a means of distinguishing those with low levels of income over the long-term – or at least the mediumterm – from those for whom income below the poverty threshold is merely transitory.

The concern here is to examine the evidence on the longer-term risk of poverty provided by the longitudinal data in the EU-SILC, which for the first time enables a proportion of the households covered by the survey (25%) to be followed over a continuous 4-year period. The focus is specifically on those defined as being at persistent risk of poverty in that they have income below the poverty threshold in the latest year surveyed – in this case 2007 for income (though the survey itself was conducted in 2008) – and in at least two of the preceding three years and on their characteristics. It is also, however, on those whose income fell below the poverty threshold at some point over the four years 2004 to 2007 for which income data are available and who succeeded in escaping from the risk of poverty during the period. Part of the aim is to identify the factors which contributed to this, and, in particular, to examine the extent to which it was associated with people in the households concerned taking up employment. The relatively small sample size, however, limits the analysis which it is possible to undertake.

In this RN we compare the distributional effects of austerity measures that are being introduced in 4 EU countries in the period of economic retrenchment following the “great recession”. We explore the effects of policy changes presented as “austerity measures” in Estonia, Greece and Spain, using the EU microsimulation model EUROMOD. Moreover, we present comparable results for the United Kingdom, drawing on the work of the Institute for Fiscal Studies. We focus on the direct effects of proposed/implemented tax increases and spending cuts across the distribution of household incomes and on relative poverty risk.

The four countries have chosen a different policy mix to achieve varying degrees of fiscal consolidation. Our analysis addresses the question of how socially fair that policy mix is. There is a range of important conceptual and comparative issues to be addressed when doing such analysis in a comparative setting. These include how to identify “austerity measures” in a consistent manner, the relevant time periods to consider, and the assumptions behind the counterfactual scenarios. Using empirical illustrations from our 4-country comparison we consider the relevance of these issues for comparative analysis of the micro-level effects of budget consolidation policies.

Combining the employment status of household members of working age in a single measure is an important indicator given that earnings from employment is the major source of household income and that households most at risk of poverty are those where such earnings are relatively low or non-existent. The EU-SILC includes such a measure of the work intensity of households but it takes account only of the number of months during the income reference year in which household members were employed and makes no allowance at all for whether they worked full-time or part-time. The concern here is to propose a new measure of work intensity which allows explicitly for part-time working and, accordingly, throws more light on the relationship between the employment characteristics of households and their income levels. This measure, like the existing one, is based on data contained in the EU-SILC on the employment status of individuals during each month of the preceding year and combines these data with details of the usual hours they work per week in their main and any additional jobs.

Values and norms regarding income inequalities are important in the determination of both primary (pre-tax) incomes and the extent of redistribution through taxes and transfers. This research note, based on the 2009 Special Eurobarometer on poverty and social exclusion, first presents a country-level analysis of the relationship between measured levels of inequality on the one hand and inequality tolerance and redistributive preference on the other hand. It shows that attitudes to inequality differ widely between EU countries and there is a substantial internal variance in most of the countries. It is also shown that inequality tolerance – which is to some extent a proxy for inequality perceptions - do not always correspond to measured income inequality indicators. After testing various inequality and poverty measures, the analysis concludes that country level differences of inequality tolerance is most likely driven by levels of relative poverty. Using both time series and cross sectional analysis, the research note examines how the overall level of income inequality  and poverty and a change in these relates to the measured level of acceptance of inequalities. Multivariate analysis shows that inequality attitudes on a personal level are driven by general political attitudes and subjective evaluation of the personal situation of the respondents, rather than by (education or labour market related) socio-economic factors.

The risk of poverty, as conventionally measured, and indicators of inequality tend to be based solely on estimates of annual household income and take no account of accumulated wealth and the effect of this on purchasing power and living standards. This is a potentially serious source of distortion which is liable to lead to misleading conclusions being drawn as regards the extent of inequalities and the relative number of people at risk of social exclusion, with obvious implications for policy.

The purpose of this research note will be first, to review the results of recent studies which have been undertaken in an attempt to estimate the scale of wealth in different EU countries and its distribution between households; secondly, to consider the implications of taking explicit account of wealth on conventional measures of inequality and the risk of poverty.

In what follows we will first provide some introductory information on the analysis of wealth, then we discuss the concept of wealth and provide an overview of recent research on wealth levels and distribution. In the second part of the paper we will consider the implications of taking explicit account of wealth on conventional measures of inequality and the risk of poverty.

Income in kind is included only to a limited extent in the measurement of household income in the EU-SILC and, therefore, in the indicators of income distribution and the risk of poverty which are based on this. The elements of income in kind which are not included, however, vary markedly in importance both across the EU and between households in a given Member State. Accordingly, their non-inclusion means that the indicators are liable to give a misleading impression of the aspects they are purporting to measure and how they differ between EU countries. The concern here is to show the way that a number of different forms of income in kind vary across the EU and between household with differing levels of income, focusing on those for which estimates exist in the EU-SILC but also giving an indication of the variation in benefits in kind provided by the State between countries.

The purpose of this paper is to explore and compare the effectiveness of Minimum Income (MI) schemes in the European Union in protecting people of working age from poverty.

These are the cash benefits of “last resort” that are intended to provide a minimum level of support. Using the EU-wide microsimulation model EUROMOD, we present the methodological steps necessary to investigate two issues. The first one is the adequacy of the MI schemes in relation to the level of income achieved by other people, in other countries, and relative to the poverty threshold. The second issue is whether the minimum level of income is in fact guaranteed, or whether there are groups of working age people who do not qualify and fall below the threshold for one reason or another.

Previous comparative studies on the effects of MI benefits have tended to rely on comparisons of the effects on stylised households or analyse survey data directly. However, using EUROMOD it is possible to capture the full range of individual and household circumstances, to identify each MI benefit separately, to identify the relevant MI assessment unit, to illustrate the effects of changes in MI schemes. It also makes possible the use of a comparable approach across countries in the simulation of the entitlements to MI schemes, which generally provide an upper bound on the likely actual effects of MI schemes.

All European countries have been hit to varying degrees by the global economic recession over the recent past. The same is true of social groups within countries. Given the inevitable lag in relevant statistics becoming available, the scale of the effect on different groups is, however, as yet far from clear, as is the extent of the protection they receive from the social welfare system in different countries. Accordingly, it is difficult to know how far these systems are doing their job of maintaining the income of the most vulnerable in society at an acceptable level and of preventing them from suffering excessive deprivation.

However, some lessons can be learned by examining the experience during past recessions, particularly that in the early-1990s, in terms of the social groups most affected and what happened to social expenditure as well as subsequent developments both in the level of expenditure on social support and its composition.

The analysis shows that social expenditure has tended to change in most countries over the past 15-20 years and indicates the widely varying degrees to which those becoming unemployed are likely to receive income support across the EU. The data for the initial stages of the recession, which extend up to mid-2009, are broadly in line with what would be expected from past economic downturns in terms of the social groups which seem to have been affected.

In the EU, housing is estimated to account for around 60% or more of household wealth, a figure which up to the present crisis tended to increase significantly year by year with the marked rise in house prices in most countries. This rise greatly exceeded the growth of earnings, increasing the attractiveness of house purchase or home improvement as a store of wealth and resulting in a substantial expansion of mortgage debt in relation to income, especially in former communist countries. The recession has led to a decline in house prices, leaving many people with loans which exceed the value of their assets and often at the same time declining income with which to meet their debt servicing charges in a housing market in which there are few potential buyers. The collapse of the market has, in addition, resulted in large-scale job losses in the construction industry, affecting relatively low-skilled workers in particular, many of whom are migrants. In a number of Member States in Central and Eastern Europe, much of the increase in mortgage debt was in foreign currencies, in Euros or Swiss francs which have tended to appreciate against domestic currencies as the recession has hit, so pushing up the value of outstanding loans and adding to the cost of repayment.

The aim of this Research Note is to present an overview of housing deprivation in EU countries and to examine the relationship between various aspects of housing quality and the risk of poverty, defined as 60% of the national median. Data from the 2007 wave of the EU-SILC is used as the main basis for the analysis, including from the special ad hoc module on housing quality which was part of the survey. The analysis shows that those on poverty levels of income are more exposed to problems of shortage of space and housing deficiencies. At the same time, the analysis indicates that such deficiencies are difficult to capture in a single indicator since they can cover a range of different aspects to do with the ease or difficulty of keeping the house warm in the Winter and cool in the Summer as well as its state of repair or the features and fittings it includes. The analysis also shows that access to basic services depends as much on the type of area in which people live, whether urban or rural, as on their level of income, though those has a more important effect in many countries, although those with low incomes living in rural areas tend to suffer a double disadvantage.

Housing costs account for a large part of household expenditure across the EU. Since everyone needs a house, the costs that this involves are to a large extent inescapable, Accordingly, there is a strong argument for taking them into account when assessing the distribution of income and the risk of poverty in EU countries. The purpose of this Research Note is to examine the scale of housing costs in different Member States and they tend to vary across income groups, between home owners and those living in rented accommodation and between broad age groups. It is also to consider what difference it would make to estimates of the risk of poverty and the way that it affects different age groups if disposable income were calculated after deducting housing costs rather then before. The results indicate that housing costs vary widely across the EU, that the scale of costs is only slightly related to the extent of home ownership in different countries, that older people tend to have higher housing costs relative to income than those younger, though this is largely because their income tends to be lower and that measuring the risk of poverty after deducting housing costs affects the older age group in particular.

This research note is concerned with the effects of social capital on wage income in European countries. More specifically, it seeks to answer the following questions: first, whether social capital has an effect on individual income; secondly, whether weak ties (remote friends, acquaintances) have a stronger effect on income than strong ties (relatives, close friends); thirdly, whether the income effect of social connections is more pronounced in the post-socialist countries than in countries with a different past.

For the estimations, data for 26 European countries (the EU-25 except Malta, plus Norway and Iceland) are used and in order to explore the impact of social capital on income, wage regressions are estimated for each country and for the pooled sample of 26 countries.

The estimations reveal a significant and positive association between social capital and wage income on the pooled sample and on the national samples of 19 countries. The income effect of social capital is found to be more pronounced in the post-socialist countries than in other EU Member States. Cross-country differences, however, are evident not only between the post-socialist and the other European countries but also within the latter group. No earnings effect of social capital is found in Denmark, Finland, Iceland, Netherlands, and Sweden. At the other extreme, in France and Spain, all social capital proxies seem to have an effect on earnings.

The objective of this report is to chart trends in social precariousness in the EU Member States. The report focuses on two major dimensions of social precariousness – precariousness of living conditions and precariousness of working conditions.

With respect to living conditions, a crucial factor that heightens precariousness is clearly inadequacy of financial resources. This involves not only the current level of income but also the duration of time over which people have experienced financial deprivation.

The second major dimension of precariousness examined is that of the precariousness of work – since the nature of people’s jobs has been shown consistently to be a central factor affecting their long-term risks of unemployment, poverty and ill-health.

The report addresses three issues.

1) Has precariousness of living and work conditions been increasing or not in the countries of the European Union, and if, so which dimensions of precariousness have changed most?

2) Has the process been relatively consistent across countries or have there been marked variations in trends reflecting different institutional systems?

3) What are the implications of precariousness for social integration, both in terms of people’s personal sense of integration in society and in terms of their attitudes to the institutional framework of society?

The shift in favour of means-tested benefits observed in several European countries since the early 1980s and the rise of refundable tax credits since the mid-1990s raise the questions of how well-targeted such benefits are and what the distributional implications of target inefficiency might be.

This research note, using the EUROMOD tax-benefit model, presents the results of estimating the effects of non-take up on target efficiency and on the performance of social assistance benefits in reducing the relative number of people with income below the poverty line.

Even though the approach tentatively adopted here may overstate the effects of non-take up if compared to the alternative of identifying eligible non claimants on the basis of expected size of entitlement, the findings seem strong enough to suggest that policy interest in the non-take up of social benefits should be encouraged further.

The concern here is to analyse the effect of economic growth on the distribution of income in EU Member States. The paper reviews relevant empirical studies which have been carried out into this relationship over recent years and examines the experience across the European Union over the first half of the present decade, investigating in particular the different channels by which growth can affect income distribution, focusing its effect on employment and household circumstances as well as on the dispersion of earnings, which has tended to be the primary centre of attention of recent research.

The research note also reports empirical results on the different channels by which growth seems to have affected different aspects of inequality in EU countries during the first half of the present decade. The analysis indicates that there is no simple relationship between growth and inequality in the countries examined. Inequality of labour earnings has increased in both relatively high growth and low growth countries, though less in the former than the latter, and examples of declining inequality was also found in both country groups.

On the other hand, results show that the direct effect of employment growth in reducing inequality is more straight-forward. In countries where economic growth gives rise to an increase of the employment rate, inequality of labour income among those of working age tends to decline. Increasing employment tends also to reduce the proportion of those living in workless households, so contributing to a more equitable distribution of employment and labour income between households.

The concern of this research note is, first, to consider alternative ways of identifying the migrant population in the EU and the numbers concerned. Secondly, it is to examine the characteristics and situation of those identified in terms of their household circumstances, education levels, employment status and income levels and to compare these with those of the non-migrant majority population in order to assess how far they are disadvantaged as a group. The focus throughout is on people of working age who are key to the income and standards of living of migrants families.

The definition of migrants adopted is based on country of birth (grouped into EU or non-EU countries) and has, in addition, a household dimension, in the sense that migrants are defined as those who live in households where all adult members were born outside the country of residence. This definition is considered to be preferable to the alternative, citizenship-based definition.

Migrants tend to face a higher risk of poverty (defined as having income below 60% of the median) than people born locally. Risk of poverty rates of both EU and non-EU-born migrants are higher than for those born locally in most of the Member States, though the difference is especially large for those born outside the EU.

Make Work Pay (MWP) policies, in the form of working tax credits or in-work benefits, are one of the main redistributive schemes in the US and the UK. They have also been progressively introduced in some continental European countries in response to the disincentive effect of generous social transfers for workless households.

Most of the literature, and in particular cross-country studies, has focused on the labour supply effects of these policies. In this note, we compare the redistributive nature of several schemes in force in four countries, Belgium, France, the Netherlands and the UK, using a European micro-simulation model.
Previous studies typically consider the consequences of policy reforms, e.g., the extension of the family tax credit in the UK in 1999. In contrast, we construct counterfactual scenarios by assuming the full withdrawal of the MWP instruments from the systems in place so as to isolate their total effect on income distribution and poverty risk. Drawing from the literature, we also discuss the potential employment effects in relation to their redistributive implications.

Comparing the effects of minimum pension schemes on incomes and poverty rates in old age in different countries gives rise to a number of conceptual problems, primarily because the means used to support incomes of those in retirement differ.

Public pensions account for the greater part of the income of those aged 65 and older in all EU countries. In countries with significant flat-rate schemes and modest second-tier pensions (Denmark,  Sweden, the UK, Ireland and the Netherlands), they are distributed more or less equally across income groups, while they favour higher income groups in countries where pensions are predominantly earnings related (Austria, France, Germany and the south European countries).

According to simulations of the EURMOD microsimulation model, the minimum pension schemes considered here are estimated to reduce the risk of poverty, as conventionally measured, among people aged 65 and over by amounts ranging from 56 percentage points in Denmark, and 27 percentage points in the Netherlands to 2 percentage points in Austria and France and not at all in Germany, Portugal and Sweden.
Recently introduced minimum pension schemes or reforms in existing systems in four EU countries selected for study are estimated to have reduced the risk of poverty of those aged 65 and over by 14 percentage points in Portugal 10 percentage points in Denmark and 2 percentage points in the UK but to have had no effect on the risk in Hungary.

Roma are the largest ethnic minority in Europe and live in large numbers often under extremely disadvantageous conditions in many parts of Eastern Europe. The situation of Roma is far more unfavourable in most of the new Member States than that of the majority population. Around 4 million Roma live in these countries but their situation in terms of housing, health, education and employment is often not much different than that of those living in third world countries.

The biggest problem perhaps relates to education: for the vast majority of Roma (7-9 out of 10 Roma aged 15 and over), the highest level of education attained is elementary schooling. In consequence, barely 10-20% of Roma of working age are in work (whether in the formal or informal economy). Their situation is not only worse than the majority population living in close proximity to them but even more unfavourable than the majority population in the country concerned in general since Roma tend to live predominantly in the most economically depressed areas where job opportunities and the chances of having a reasonable standard of living are in any case lower than elsewhere.

A number of factors combine to create these disadvantages. One of the main factors is segregation at school which leads to underachievement of Roma children who are often sent to special schools for those with learning difficulties, or the mentally disabled in much larger numbers than children of the majority population. Lack of education and a job tends to lead directly to severe poverty with poor housing conditions and limited access to basic services, which in turn results in poor heath and high mortality and morbidity rates. The situation is reinforced by widespread discrimination in all walks of life: at school, on the labour market, in the health care system and so on.

A number of targeted policy measures and programmes have been implemented in the region in recent years to overcome these familiar problems; their effect, however, has been minimal. The priorities for policy are to focus on access to pre-school education, desegregating of schools, implementing labour market programmes targeted on the special needs of Roma at the local level and the potential opportunities open to them, In addition, medium- and long-term multi-dimensional projects should be launched covering housing, employment, education and health care with a conscious attempt made to ensure coherence between the different aspect. While, in general, access to data on ethnicity needs to be carefully controlled to ensure protection of human rights, the non-collection of any data at all denies policy-makers the quantitative information which would make it easier to design suitable policies and to monitor the effectiveness of the measures in place. There is a need, moreover, for anti-discrimination education and training for all those coming into regular contact with Roma if they are to be properly integrated into society.

The biggest problem perhaps relates to education: for the vast majority of Roma (7-9 out of 10 Roma aged 15 and over), the highest level of education attained is elementary schooling. In consequence, barely 10-20% of Roma of working age are in work (whether in the formal or informal economy). Their situation is not only worse than the majority population living in close proximity to them but even more unfavourable than the majority population in the country concerned in general since Roma tend to live predominantly in the most economically depressed areas where job opportunities and the chances of having a reasonable standard of living are in any case lower than elsewhere.

A number of factors combine to create these disadvantages. One of the main factors is segregation at school which leads to underachievement of Roma children who are often sent to special schools for those with learning difficulties, or the mentally disabled in much larger numbers than children of the majority population. Lack of education and a job tends to lead directly to severe poverty with poor housing conditions and limited access to basic services, which in turn results in poor heath and high mortality and morbidity rates. The situation is reinforced by widespread discrimination in all walks of life: at school, on the labour market, in the health care system and so on.

A number of targeted policy measures and programmes have been implemented in the region in recent years to overcome these familiar problems; their effect, however, has been minimal. The priorities for policy are to focus on access to pre-school education, desegregating of schools, implementing labour market programmes targeted on the special needs of Roma at the local level and the potential opportunities open to them, In addition, medium- and long-term multi-dimensional projects should be launched covering housing, employment, education and health care with a conscious attempt made to ensure coherence between the different aspect. While, in general, access to data on ethnicity needs to be carefully controlled to ensure protection of human rights, the non-collection of any data at all denies policy-makers the quantitative information which would make it easier to design suitable policies and to monitor the effectiveness of the measures in place. There is a need, moreover, for anti-discrimination education and training for all those coming into regular contact with Roma if they are to be properly integrated into society.

Families with children receive significant support from government. This is mainly to reduce the risk of child poverty and assist parents with childcare responsibilities to balance jobs and family life. There is a great variety of measures to support families and these have been used to differing extents across the EU. This policy brief focuses on the support given to families with children through tax-benefit systems.

All EU Member States provide some forms of support for children, typically in the shape of universal cash benefits, usually not taxed and increasing with the number of children in the household. Child-related tax concessions are generally complements to cash benefits and vice versa. Many measures are related to income, except in the Nordic countries, and some to the employment status of parents.

The support provided, estimated by using the EUROMOD micro-simulation model, varies between EU-15 countries (the new Member States are not so far covered by the model). In most countries, the support for children through child contingent payments (those dependent on the presence of children) is significant. But benefits paid for other reasons and which are not related to children as such (‘nonchild contingent’) also effectively provide support and in some countries are even more important.

Child contingent support mostly consists of family benefits but also social assistance, including housing benefits. There is additional support through tax concessions in 9 countries but generally at a low level. Non-child contingent benefits vary considerably in terms of the form they take, being mostly old-age pension in Southern European countries and unemployment benefits and social assistance in others.
The way child-related support is channelled has an important effect on its distribution between households. Tax concessions tend to go more to better off families or provide flat-rate support to households with different income levels. In principle, shifting support from taxes to benefits, therefore, would have the effect of redistributing income to the poorest children, especially if the benefits are means-tested, without any additional budget cost. On the other hand, tax concessions tend to involve less distortion in terms of work incentives and have fewer problems of non take-up.

This paper is divided into two parts. The first is concerned with policies for addressing child poverty and reviews the studies carried out on this. The second part examines the incidence of child poverty among ethnic minorities on the basis of data from the EU-SILC. The data concerned are not directly on ethnic origin, since questions on this are not included in the survey, but relate to nationality and country of birth, which at least may be indicative of the position of ethnic minorities across the EU.

The analysis shows that children whose parents were born outside the EU have both access to a lower median income and a higher risk of poverty than those whose parents were born in the country concerned. This disadvantage does not seem to be wholly linked to the presence of children themselves in the households concerned, since a similar disadvantage is evident for households without children where all members were born outside the EU.

The presence of children, however, seems to compound the disadvantage. In the EU as a whole, children whose parents were born outside the EU represented 5-6% of all children in the EU but make up 11-12% of all children with income below the poverty line. In Austria and Sweden, this proportion is over 25% and in Belgium and Luxembourg, around a third. The disadvantage does, however, seem to be linked to employment. Children whose parents were born outside the EU are far more likely in most parts of the EU to live in households where no-one of working-age is employed and much less likely to live in households where everyone is in full-time employment. It also seems to be linked to low wage levels since in many countries a large proportion of the children concerned live in households where one or more of their parents is in work. In the UK, which is one of the few EU Member States in which data on ethnic origin are collected, the evidence indicates that there are marked differences in the position of children from different ethnic backgrounds. The risk of poverty is, therefore, much higher for children in Bangladeshi or Pakistani families, for example, than for those in Indian families, which seems partly attributable to differences in family size. Accordingly, it is important to not to treat all children in ethnic minority families as if they were in the same situation.

An important objective for social policy has always been to provide safeguards against reductions in income and living standards that result from unemployment, disability, separation, widowhood and other such life course events. Empirical evidence shows that unemployment is closely linked to low income and high risk of poverty. Unfortunately, studies on the effect of unemployment on subsequent earnings are limited, except for those for the UK that clearly indicates an adverse effect. In terms of policy, the widespread shift from passive to active labour market measures has contributed to reducing unemployment in the EU through increasing incentives to return to work and training programmes for the young unemployed (e.g. the New Deal programmes in the UK) and retraining for the long-term unemployed, which have been developed in almost all Member States. The Nordic countries provide the major example of how State involvement and an extensive social security system can facilitate reentry into the labour market and maintain living standards of those experiencing unemployment.

Existing studies indicate that labour market events are critical to an individual’s risk of entering into poverty and the chances of escaping it. There is a clear gender differential in the effect of the labour market events, with women’s loss of employment often buffered by the employment of their partner.

Among family related events, widowhood seems to double the chances of women’s income falling to poverty levels as compared with men, while separation appears to have an adverse effect on the income of women alone. By contrast, the effects of having children and cohabitation on the risk of poverty do not show much variation between men and women. These findings suggest a need for greater gender mainstreaming of social policies and the provision of a safety net which takes account of the often different situations of men and women.
In the case of separation, the evidence suggests, not surprisingly that women with better education and those who work full-time before separation tend to have higher income afterwards, while income declines with the number of children. The effect of different types of social welfare system seems to be relatively weak, though post-separation income in the more ‘liberal’ countries (such as the UK and Ireland) seems to be higher than in more ‘corporatist’ countries (such as Austria, Germany and France). This, however, could reflect the greater participation of women in the labour force in the former or a different composition of women becoming separated – ie those with higher education levels in full-time work.

The average hours worked by those in employment has tended to decline over the long-term. In recent times, however, this is largely a result of an increased proportion of those employed, women in particular, working part-time and there has been little if any decline in the hours worked by most individuals. Indeed, the average hours worked by those in full-time jobs – who still account for around 80% of those in employment in the EU – have either remained the same or increased slightly over the past decade or two in most countries. People generally, therefore, have not experienced any significant reduction in the amount of time they spend in work, but there has been a marked increase in EU15 countries at least in the proportion of working-age population in employment, due to many more women having jobs.

Accordingly, the main tendency in respect of working time in EU15 countries – though not in most of the new Member States where there has been a sharp reduction in employment rates with the transition away from a situation where everyone of working-age was expected to work and had a guaranteed job – has been a reallocation of work from men to women. This is most marked in couple households where in the majority cases both partners are now in employment, irrespective of whether or not they have children. The result is that more people, again women especially, are facing the problem of reconciling the pursuit of a working career with their family responsibilities.

Time use surveys tend to support the above conclusions. Income levels seem to have relatively little effect on the amount of time men spend in paid employment but seem to influence whether women who have a job tend to work part-time or full-time. In higher income Member States, therefore, men spend almost as much time working as in lower income ones but women spend significantly less.
Although this enables them to spend a little more time pursuing leisure activities, especially socialising, the larger part of the reduction in time spent working goes to personal care and travelling, mainly for non-leisure reasons, to shop and to transport children.
While there is not much evidence of people wanting to work less as their income increases, it is still the case that their ability to determine how long they work, when they work and whether they work part-time or full-time is very limited in most countries.

This research note examines the relationship between systems of education across the EU and the issue of equality of opportunity, based largely on a review of the existing literature. The broad definition of equity used by some studies (e.g. OECD equity reports) is too general for the purpose of this brief. The three common dimensions of equality – socio-economic, gender and immigrant – will be simplified to only one throughout the paper. Most recent educational research on this topic focuses only on the socio-economic dimension. Literature on the impact of institutions on the educational performance of men and women or immigrants is sparse. This research note, like most recent literature, will focus on socio-economic equity and will implicitly assume that the observations made would also fit – at least partially – the other two dimensions as well.
Key points: 

- Inequality of opportunity in education is probably impossible to eliminate completely and policy should instead focus on reducing inequalities.

- Changing the institutional arrangements in systems of education is only one way to reduce inequalities but it is probably the most straightforward and amenable way

- Systems under which children are ‘tracked’ or streamed at an early age, vocational tracking and other means of grouping children into different schools tend to promote the reproduction of inequalities

- There is as yet little empirical evidence to indicate the effect on inequality of free choice of schools, pre-school education, the length of studies and increasing the accountability of schools, though there is a large body of theoretical literature.

The sharp fall in fertility rates over recent years across the EU and its implications for population in coming decades has prompted a concern with the underlying causes and with the scope for policy action for arresting it. An increasing focus is on the costs to parents associated with children. These costs can be substantial in terms of both the additional expenditure which children involve and the opportunity costs to parents – and women, especially – from the effect of children on their quality of life and prospective earnings.

The costs tend to be especially high for women with relatively low education levels, who may not be able to cover the costs of childcare from the income they earn by working. In consequence, the proportion of women with low education who combine having children with paid employment is relatively small in many EU Member States. The cost, however, can also be high for those with higher education levels, who may damage their career chances, and future earnings, by taking time off work to have children.

The extent to which state support is available for parents, and young mother in particular, to help them cope with the costs of children and to reconcile working with caring responsibilities varies considerably across the EU. It is much more extensive in the Nordic countries especially than elsewhere and particularly limited in the south of the EU and in the new Member States. These differences seem to be reflected in fertility rates. Whereas in the past, therefore, there was an inverse relationship between fertility rates and the proportion of women in paid work, the relationship now appears to be positive.
Accordingly, high employment rates tend to go together with high fertility rates, both rates reflecting the extent of support available to women with children. Differences in the latter show up in time use surveys which indicate that women spend less time working, whether in paid or unpaid activities, in Member States where support arrangements are relatively extensive and where incomes are higher. They also show that work is more equally divided between men and women in these countries and that less of the burden of having children falls on women.
The policy implications are clear-cut. The evidence suggests that governments can influence decisions of whether and when to have children and, therefore, fertility rates through family-friendly policies and childcare support. But even leaving considerations of demographic engineering aside, such policies are needed if women are to be able to fulfil their aspirations not only as regards having children but also having a worthwhile and satisfying career.

Leaving the parental home and establishing a household of their own is a key step to young people gaining autonomy. This process (obviously linked to fertility and demographic trends) is influenced by, and has important implications for, public policy in a variety of areas, including employment, education, housing and social protection.

A closer look at this process shows two distinct phenomena at work that need to be interpreted. On the one hand, the timing of young people leaving home continues to vary considerably between European countries, partly reflecting the persistence of different cultural norms. On the other hand, young people throughout Europe (and beyond) tend to leave home at a later stage than their counterparts a few decades before, possibly indicating common obstacles of an economic nature.

If examined together, these two phenomena suggest complex interactions between cultural norms and economic risks and opportunities shaping individual behaviour. In general, the decision to leave the parental home can be usefully thought of as choice under constraints.
Disentangling the elements of “choice” from those of “constraints” is not an abstract question. To the extent that the decision to leave home is determined by individual preferences, policy intervention to alter individual behaviour would widely be regarded as inappropriate. On the other hand, to the extent that the current situation is mostly the by-product of economic developments and the prevailing policy and institutional environment which frustrate the efforts of young people to achieve autonomy, then policy intervention would seem to be wholly legitimate. In the latter case, the scope for policy makers to facilitate such efforts might be considerable.