Économie et Statistique n° 469-470 - Statistics on Income and Living Conditions (EU-Silc/SRCV) Income and poverty - longitudinal approach and international comparisons; quality of life
A better understanding of the risk factors of poverty in terms of living conditions by controlling for unobserved fixed characteristics
The indicator of poverty in terms of living conditions identifies those people whose living conditions are the most adverse, by means of a list of difficulties measured in the SILC scheme. Between 2004 and 2009 the poverty rate in terms of living conditions among people aged 16 or more was over 11% on average, but the population concerned was “renewed” by 40% each year. Ultimately, over a 6-year period poverty in terms of living conditions affected one person out of four. The longitudinal part of the survey allows an analysis of the influence of each factor, independently of the others, on the risk of a person being poor, by controlling for both observed and unobserved individual heterogeneity. The emphasis here is on the impact of changes in personal situation, particularly in terms of family and activity, on the risk of poverty in terms of living conditions. The results of traditional models - which only take observed characteristics into account - generally underscore the particularly high risk of poverty among single-parent families and the unemployed. Controlling for unobserved heterogeneity significantly modifies the appraisal of the hierarchy of risk factors. On the one hand, after a separation, the likelihood of being poor increases as much for the isolated spouse as for the one who has child custody. On the other hand, after a job loss, inactivity leads to an even higher risk of poverty than unemployment would. Retirement appears not to have any impact. Additionally, the birth of a first child seems to be neutral, and the arrival of the third child decreases the risk. Lastly, a deterioration in health increases the risk of poverty.