The magnitude and direction of changes in age-specific at-risk-of-poverty rates: An analysis of patterns of poverty trends in Europe in the mid-2010s

Abstract

The EU’s at-risk-of-poverty threshold is set at 60% of national median disposable equivalent income. Changes in median income therefore shift the at-risk-of-poverty threshold, which is likely to affect at-risk-of-poverty rates for some population subgroups more than for others. However, there is only scarce research on how the choice of poverty threshold affects the overall picture of poverty trends. This study aims to find out whether there are typical patterns related to changes in age-specific at-risk-of-poverty rates. This is done by analysing how the size and direction of changes in at-risk-of-poverty rates vary between age groups. Furthermore, the aim is to establish how changes in age-specific at-risk-of-poverty rates are associated with changes in poverty thresholds, income and employment. The study uses EU-SILC microdata and focuses on the development of poverty rates in 30 European countries in the mid-2010s. The results show that, on average, older age groups have experienced larger changes in at-risk-of-poverty rates than children or the working-age population. The increases or decreases in old-age at-risk-of-poverty rates are typically in an opposite direction to those seen in working-age poverty. Furthermore, different poverty thresholds can give a different picture of poverty trends, especially for the older population. Lastly, increases in the employment rate and income tend to be associated with decreases in child and working-age poverty, but even an opposite pattern can be found for old-age poverty. Overall, the findings imply that especially for short periods of time, caution is warranted when drawing conclusions about changes in old-age at-risk-of-poverty rates.