Poverty in Europe and the USA: Exchanging official measurement methods

Notten, Geranda and de Neubourg, Chris (2007). Poverty in Europe and the USA: Exchanging official measurement methods. Maastricht University.

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    Author Notten, Geranda
    de Neubourg, Chris
    Title Poverty in Europe and the USA: Exchanging official measurement methods
    Publication Date 2007
    Place of Publication Maastricht, NL
    Publisher Maastricht University
    Pages 52
    Abstract Official poverty methodologies differ from other poverty measurement methods in the sense that the official ones are more often used as a benchmark to develop new policies as well as to evaluate the performance of existing programs. Europe has the tradition and the practice to use relative poverty as ���official�۝ poverty estimates (Common Laeken indicators); the USA use an objective method to estimate official poverty (Orshansky indicator). Although related, each approach portrays different dimensions of poverty. In this study we compare the official poverty methodologies of the USA and EU by applying them on datasets of both countries. Using the harmonized European Community Household Panel (ECHP) for the EU and the Panel Study on Income Dynamics (PSID) for the USA, we compare poverty trends in the USA and EU in relative and absolute terms on a national level as well as for various subgroups of the populations. Additionally, we use the panel dimension of the data to analyze individual poverty dynamics. We find considerable differences between the estimates based on Laeken indicators and the estimates based on an Orshansky type of technology. It was expected that in general Orshansky generates lower poverty estimates than the Laeken indicators. However, it is puzzling to find that a.) these differences are less systematic than expected and b.) these differences are not constant over time and in some cases even have the reverse sign. These findings point to the desirability of involving both poverty concepts into (official) poverty assessments. Keywords: poverty, absolute, relative, social policy, United States, European Union JEL: H53, H55, I3
    Copyright Holder Maastricht Graduate School of Governance
    Copyright Year 2007
    Copyright type All rights reserved
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