Persistent Income Poverty and Deprivation in the European Union: An Analysis of the First Three Waves of the European Community Household Panel

The starting point of this paper is the difficulties created for cross-sectional income poverty lines by the fact that current income is relatively weakly related to current life-style deprivation. In this paper, using the UDB for the first three waves of the ECHP, we have sought to establish how much progress can be made in resolving such difficulties by focusing on poverty persistence. Our results show that this approach does constitute a significant improvement over its cross-sectional counterpart. Relationships involving persistent poverty come close to being uniform across countries. The measure of persistence also conforms to our expectations of how a poverty measure should behave in that, unlike the situation for relative income poverty lines, defining the threshold level more stringently enables us to progressively identify groups of increasingly deprived respondents. However, the overlap between the dimensions is far from perfect. Persistent income poverty is more strongly influenced by factors that are closely related to the generation of resources while lifestyle deprivation is more closely associated with factors that reflect additional demands. Both are significantly related to subjective economic well being with the impact of the former being substantially mediated by the latter while relative deprivation has a substantial net impact.