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Unemployment and its poverty consequences

poverty trajectories after job loss in different European welfare regimes

Leen Vandecasteele


This paper complements existing poverty dynamics research by examining typical income poverty trajectories during the first five years after experiencing job loss. Unemployment is a known poverty trigger, but there is relatively little knowledge of its mid-term effects on a household’s level of living. By broadening the time frame of research into poverty transitions, a more complete picture can be drawn of the poverty patterns related to job loss. Latent class analyses of the European Community Household Panel show that the poverty risk after job loss is not equally large and long-lasting for everyone. Across Germany, Spain, Denmark and the United Kingdom broadly four comparable latent classes can be found: persistent non-poor, persons with a transient poverty risk, persons with longer-term poverty risk and late poverty entrants. The latter group is interesting in that it is not normally studied in regression approaches to the study of poverty dynamics. We see that people who split up with their partner in addition to losing their job have a higher risk of late poverty entry. Additionally, people who remained unemployed for five years as well as people who experienced a second job loss after labour market re-entry both had a higher late poverty entry risk. On the one hand, the late poverty risk is thus a matter of fast re-employment and new job loss. On the other hand, also people in continuous unemployment face a late poverty entry risk, in countries where they were initially well protected by more generous income replacement schemes.

Publication Type(s)

Conference Paper

Ten Years of War Against Poverty Conference Papers

Conference: Ten Years of War Against Poverty


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