In the microsimulation literature, it is still uncommon to test the statistical significance of results. In this article we argue that this situation is both undesirable and unnecessary. Provided the parameters used in the microsimulation are exogenous, as is often the case in static microsimulation of the first-order effects of policy changes, simple statistical tests can be sufficient. Moreover, standard routines have been developed which enable applied researchers to calculate the sampling variance of microsimulation results, while taking the sample design into account, even of relatively complex statistics such as relative poverty, inequality
In this paper we study trends at the lower tail of the EU-wide distribution of disposable household income. In contrast to most studies, we take a pan-European perspective and compare income levels across countries, after accounting for average price differences. More in particular, we make use of EU-SILC 2008-2014 to study trends and levels in the EU-wide low income proportion and the EU-wide low income gap. From the analysis emerges a highly dynamic picture which points to both convergence and, especially since 2010, divergence. Living standards in the new EU Member States, most notably Poland, Slovakia, and Bulgaria, have considerably improved in comparison with the EU-wide median, while living standards in Greece, and to a lesser extent Spain and Italy have clearly lost ground. These trends mark an important change in the composition of the bottom of the pan-European income distribution, with an increasing weight of the 'old' EU Member States at the bottom end, most notably the crisis-hit Southern European countries. Worryingly, we also observe that no country succeeded in substantially reducing the EU-wide low-income proportion while also substantially reducing the at-risk-of-poverty rate. This emphasises the need of a dual perspective on solidarity, a national and a pan-European, and underscores the importance of reflecting further on the need of mutual insurance and true solidarity across borders.
Enlargement of the European Union to the less prosperous countries of Eastern Europe has invigorated the debate about the accurate measurement of poverty. Even though there is agreement that poverty indicators should somehow take account of the social context, there is much discussion of the extent to which poverty indicators should be relative (i.e. dependent on the social context). The compound indicator of poverty and social exclusion which is used in the new Europe 2020 Strategy consists of one sub-indicator using national poverty lines and another one which adheres to a single European poverty line. As a result, the number and distribution of the poor differs markedly with each sub-indicator. Although each sub-indicator has both academic merit and political importance, we believe that reference budgets may offer important additional information on the cross-national variation in the minimum income needed to participate fully in society. Moreover, poverty lines based on reference budgets can suggest ways to reduce poverty. The main disadvantage of the European reference budgets currently used is that they are difficult to compare. In this article we outline how to move forward towards cross-country comparable reference budgets, listing the main points of discussion in order to develop the essential common theoretical framework and methodology.
In Europe, the elderly stand out for their heavy reliance on welfare state arrangements for securing their living standard. In spite of relatively high elderly poverty rates in many EU member states, the past two decades have witnessed a tendency to re-strengthen the link between past contributions and pension benefits, and to rely more strongly on private pensions. At the same time, public pension replacement rates are projected to decrease in a large number of EU member states. In this context, minimum income protection for Europe"s elderly is likely to become even more important for alleviating elderly poverty than is the case today. Yet, minimum income protection schemes targeted at the elderly have remained largely undocumented in the international literature. Therefore, this chapter reviews existing minimum income policies for the elderly in Europe and develops a typology based on entitlement and eligibility criteria. Building on data from a project involving national experts from 25 EU member states, it is shown that in the 2000s welfare erosion of elderly persons" minimum income guarantees has been limited Moreover, a substantial number of countries has pursued a deliberate policy of increases in minimum income benefits for the elderly. Nonetheless, only in a few countries benefits are adequate for lifting elderly persons above the poverty line. At the same time, differences between EU member states in terms of mode of access and benefit levels remain large.
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