Poverty developments in the EU after the crisis : a look at main drivers; Issue 31: May 2014

This brief reviews developments in poverty across EU countries after the crisis and analyses their main macro drivers. Poverty increases were recorded mostly in terms of severe material deprivation and low work intensity rates starting from 2010 and were concentrated in those countries most severely hit by the crisis (Spain, Greece, Ireland and Italy, with the exception of Portugal). Econometric estimates suggest that while relative poverty measures such as the risk of poverty rate does not appear to have clearly identifiable drivers, income per capita and unemployment exhibit a significant explanatory power for the severe material deprivation and anchored at risk of poverty rates. In particular, the share of long-term unemployment on total unemployment stands out as the most significant driver. The analysis also shows that social expenditure contributes to curb the rise in poverty, and that this type of expenditure after the crisis did not fall on top of what explained by standard determinants.