Nowcasting: Estimating developments in median household income and risk of poverty in 2014 and 2015

The at-risk-of-poverty rate (AROP) is one of the three indicators used for monitoring progress towards the Europe 2020 poverty and social exclusion reduction target. Timeliness of this indicator is crucial for monitoring of the social situation and of the effectiveness of tax and benefit policies. However, partly due to the complexity of EU-SILC data collection, estimates of the number of people at risk of poverty are published with a significant delay. This paper extends and updates previous work on estimating ('nowcasting') indicators of poverty risk using the tax-benefit microsimulation model EUROMOD. The model's routines are enhanced with additional adjustments to the EU-SILC based input data in order to capture changes in the employment characteristics of the population since the data were collected. The nowcasting method is applied to twenty-five EU Member States. AROP rates are estimated up to 2015 for twenty countries and 2014 for the remaining five countries. The performance of the method is assessed by comparing the predictions with actual EU-SILC indicators for the years for which the latter are available.