Mountains on the move: recent trends in national and EU-wide income dynamics in old and new EU Member States

In European poverty research, poverty is usually measured with a poverty line defined as a percentage of the national median income. However, for grasping trends in social cohesion in the European Union (EU), and identifying options and pitfalls for social policy initiatives at the EU level, EU-wide income differences are at least as important as national income differences. Therefore, in this paper we document recent trends in national and EU-wide income poverty dynamics. We analyse to what extent household incomes have converged in the EU and how this has impacted upon poverty dynamics using both national and EU-wide poverty lines, before and during the current economic crisis. We pay particular attention to disentangling the contribution of both ‘old’ and ‘new’ EU Member States to EU-wide poverty dynamics. For doing so, we make use of four waves of EU-SILC data (2005-2011), the EU reference source for information on income and living conditions in Europe. We find that poverty dynamics using national and EU-wide poverty lines have evolved very differently in the period 2005-2011. Whereas national poverty stagnated during 2005-2009, mainly due to substantial increases in median incomes, EU-wide poverty substantially decreased in the same period. In contrast, although income poverty has increased between EU-SILC 2009 and EU-SILC 2011 when measured with national poverty lines, the crisis seems to have halted, but not (yet) substantially reversed the convergence trend of the lowest incomes in the EU towards the EU-wide median income. Finally, we find that when the new Member States joined the EU in 2004, poverty measured with a pan-European poverty threshold was predominantly a problem of the Eastern European EU Member States, whereas by the end of the period EU-wide poverty is at least as much a problem of low incomes of part of the population living in the EU15.