A Measure to Target Antipoverty Policies in the European Union Regions

Paola Annoni, Dorota Weziak-Bialowolska

The reformed cohesion policy (CP), which is the major investment tool in the European Union (EU) for delivering the Europe 2020 targets, will soon make available substantial funds to improve the quality of life of the EU citizens through supporting the economic and social development of the EU's regions and cities. Because the reformed CP has intensified the emphasis on measuring results, also with respect to reducing poverty and social exclusion, this paper is about measuring poverty to better target EU local policies. We propose a measurement of poverty at the sub-national level in the EU by means of three poverty components describing absolute poverty, relative poverty and earnings and incomes. The core data source is the cross-sectional European Statistics on Income and Living Conditions (EU-SILC) micro-data, waves 2007-2009. Data reliability at the sub-national level is statistically assessed and the regional level is described whenever possible. To calculate the poverty components, an inequality-adverse type of aggregation is applied in order to limit compensability across indicators populating a component. No aggregation is, however, performed across the three components. In the computations of income-related indicators, individual disposable income adjusted for housing costs, used as a proxy for the costs of living, is used. Poverty is confirmed to be a multi-faceted phenomenon with clear within-country variability. This variation depends on the type of region likely linked to the urbanisation level and, consequently, to the costs of living. The proposed measure may serve to better target anti-poverty measures at the local, sub-national level in the EU.