Diverging Income and Employment Opportunities in the Crisis
Edited by Martin Heidenreich
Chapter 3: Determinants of persistent poverty. Do institutional factors matter?
AbstractThe article discusses the distribution of persistent poverty and its influencing national factors during the economic and financial crisis. Taking into account the difference between temporary and persistent poverty, the question arises whether institutional factors especially prevent from being long-term poor. In the analysis based on EU-SILC longitudinal data covering a four-year time span (2006–2009 to 2009–2012) it can be shown that, first, persistent poverty highly affects disadvantaged social groups. On a national level, the role of social expenditure becomes more important for preventing long episodes in poverty. On the other side, the unemployment rate loses its influence. Furthermore, in a second step, it becomes clear that temporarily and permanently poor people are affected differently by those national factors. Further, whereas a higher unemployment rate does not change the risk for becoming long-term poor, growing social expenditure lowers the risk. Hence, during the crisis job security can no longer be seen as a safeguard preventing people from entering or leaving long-term poverty, but social expenditure might be a working instrument to protect people from severe poverty.
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