Cross-country evidence on the individual dynamics of in-work poverty in the EU

Abstract

The dynamics of in-work poverty is complex since it involves both a household-level dimension—the poverty status—and individual characteristics—the employment status. Because of in-work poverty's dual nature, similar indicator levels may conceal different underlying dynamics in terms of poverty and employment transitions. Our analysis addresses the dual nature of in-work poverty transitions by considering all working-age individuals and analysing jointly trajectories into and out of both employment and poverty. We estimate an econometric model that jointly describes the dynamics of the two components. Furthermore, we examine the classic in-work poverty measure alongside an indicator of in-work material deprivation. Our analysis confirms that in many countries employment status alone is not able to prevent poverty or material deprivation. Poverty exhibits strong persistence both directly and through reduced chances of employment entry. The trajectories into and out of in-work poverty and in-work material deprivation vary considerably between countries.