Poverty based on income and net wealth: patterns and trends

This research note focuses specifically on poverty as it is one of the key challenges identified in the European Pillar of Social Rights and its Action Plan. It highlights recent patterns, trends, and dynamics in poverty when calculated based on income and net wealth jointly across a large set of EU countries, relying on household microdata from the Eurosystem Household Finance and Consumption Survey (HFCS) between 2009 and 2020. 

It contributes to the literature in at least four distinct ways:

1) It provides an up-to-date overview of the incidence and patterns of poverty based on income and net wealth for the largest set of (EU) countries ever studied in this regard, including countries that have so far not been part of the literature.

2) It consists of an in-depth discussion of poverty measures that combine information on income and net wealth, including in relation to Eurostat’s experimental statistics on income, wealth, and consumption. It goes beyond previous research by analysing poverty rates as well as poverty gaps and the profile of the poor population. Furthermore, where the literature has primarily focused on those who are able to leverage income poverty through wealth holdings, here those who cannot or are poor due to negative net wealth (i.e. higher debt than assets) are given the same level of attention. 

3) It assesses how poverty based on income and net wealth evolved over the most recent decade, while the literature has so far mostly focused on mapping patterns at a single moment of observation. 

4) It introduces a dynamic perspective by leveraging panel data for Belgium following the same households over time to study movements in and out of poverty, calculated based on income and net wealth jointly. 

Check the factsheet.