Measures of Poverty in France

Measures of Poverty in France Pascal Chevalier INSEE Paris Seminar for TACIS Countries

Introduction Measures of: Relative income poverty Poor living conditions Subjective poverty No absolute poverty approach Strong demand for composite indicators to provide a clearer picture of poverty

Income poverty: French sources (1/3) Taxable Income Survey Conducted annually since 1996 35,000 households since 2002 (70,000 previously) Area sampling (geographical clusters) Part of the Employment Survey (annual up until 2001, continuous since 2002) tax data on income (+) imputed unreported income (-)

Income poverty: French sources (2/3) Family Budget Surveys (1995, 2000, 2005) 10,000 households Detailed income and consumption data European Community Household Panel 8 waves 1993/4 2000/2001 7,000 households Detailed income questionnaire

Income poverty: French sources (3/3) European system SILC: Annual panel survey with a rotating sample renewed by a ninth each year 16,000 households in 2004 (1st year), 3,000 new households in each following year Detailed questionnaire on income and social indicators Benchmark: Taxable Income Survey

Income poverty: Some figures Average disposable income (ordinary households): 2280 euros per month in 2002 ; median : 1950 euros Average equivalised disposable income : 1430 euros per month ; median : 1250 euros, hence poverty line at 625 euros per month and per CU at the 50 % line Thus 12% of people are poor at the 60% line, and 6% at the 50% line (excluding households of students aged over 25) But the figures depend on the sources

Income poverty Number of persons below the income poverty line Poverty line in Euros per month and by cu (Euros 2002) Poverty rate at 50% line(%) Number of poor people at 50 % (thousands) Poverty rate at 60% line(%) Year 1970 344 12 5 785 17,9 1975 433 10,2 5 194 16,6 1979 499 8,3 4 359 14,2 1984 518 7,7 4 154 13,5 1990 553 6,6 3 751 13,8 1996 565 7,2 4 089 13,5 1998 575 6,7 3 806 12,8 2000 600 6,5 3 742 12,7 2002 627 6 3 493 12,2

Income poverty Evolution of poverty rates 25 20 15 10 5 0 1970 1975 1979 1984 1990 1997 2000 2002 Ensemble Salariés Retraités Les chômeurs ayant déja travaillé sont intégrés dans la catégorie des salariés. Ensemble = salariés, indépendants, autres actifs, retraités et autres inactifs.

Income poverty Population pauvre selon l'activité individuelle En milliers 1996 1999 2001 Actifs au moins 6 mois de 18 ans ou plus 1 695 1 416 1 353 indépendants 12 mois 343 238 232 salariés ou chômeurs 1 353 1 179 1 121 salariés 12 mois 457 379 394 salariés 1 à 11 mois et actifs au moins 6 mo 400 391 360 chômeurs au moins 6 mois 496 409 367 Inactif de 18 ans ou plus 1 197 1 187 1 157 étudiants de 18 ans ou plus 248 211 177 Inactifs de 18 à 59 ans 519 520 542 retraités ou inactifs de 60 ans ou plus 430 455 437 Enfants de moins de 18 ans 1 196 1 037 1 047 Ensemble de la population 4 089 3 641 3 557

Income poverty Components of poor/non-poor living standards Households poor non poor % % Wages 30,8 79,8 Unemployment benefits 7 3,2 Pensions 19,7 24,3 Revenus du patrimoine 1,3 4 Family benefits 10,3 2,7 Housing benefits 15,9 1,2 Minimum wellfare benefits 18,2 0,9 Income Tax 1-6,1 Local taxes -0,4-1,3 Social security taxes -3,6-8,6 Disposable income 100 100

Income poverty Taux de pauvreté selon l'âge de la personne de référence 30 25 20 15 10 5 0 1970 1979 1990 2002 moins de 25 ans 65 ans et plus

Income poverty: robust trends Changes in the social and demographic structure of the poor: Smaller share of elderly, greater share of young Robustness is purely qualitative: level data are subject to a whole set of limitations (see presentation by Daniel Verger)

Specific limitations of tax data sources: Non-taxable income is imputed (family allowance, housing benefit, old age benefit, etc.) Recognising negative income and losses for selfemployed workers Cross-border workers and income earned abroad Accuracy of tax returns of households that pay no tax (nearly 50%) Nontaxable income and income subject to withholding taxes

Subjective poverty and poor living conditions: French sources European Panel(ECHP) SILC system Ongoing living conditions surveys (yearly, in january and october) 6,000 households Living conditions indicators

Poor living conditions (1) Material deprivation Consumption: unable to afford % of households...clothes and shoes 5...heating 4...meat, chicken or fish every other day 6...a one-week holiday away from home once a year 26...replacements for worn furniture 25...having friends or family in for a drink or a meal 5 Source: European Panel, 2001, INSEE. Weighted data (cross-sectional weighting)

Poor living conditions (2) Poor housing % of households Overall comfort of home: lack of Separate kitchen 11 Indoor toilet 2 Bathtub or shower 2 Hot running water 2 Central heating 22 Electric heaters 75 Garden or terrace 36 Housing hardships: Home too small 12 Home too damp 15 Home too dark 9 Inadequate heating 8 Leaking roof 5 Windows and floors in bad repair 8 Noisy neighbours 9 Noisy surroundings 19 Pollution 17 Vandalism 20 Source: European Panel, 2001, INSEE. Weighted data (cross-sectional weighting)

Poor living conditions (3) Material deprivation % of households Durables: lack of Dishwashing machine 10 Car 17 Telephone 3 Videocassette recorder 27 Colour television 4 Source: European Panel, 2001, INSEE. Weighted data (cross-sectional weighting)

Poor living conditions (4) France :Condition de vie - non possession France : Condition de vie - non possession 60% 40% 50% 40% 30% 30% 20% 20% 10% 10% 0% D1 D2 D3 D4 D5 D6 D7 D8 D9 D10 Déciles de revenu par uc 0% D1 D2 D3 D4 D5 D6 D7 D8 D9 D10 Déciles derevenu par uc Bain ou douche eau chaude courante Jardin Voiture Micro-ondes Logement petit Vandalisme Magnetoscope Télé couleur Taux de pauvreté Pollution Taux de pauvreté

Poor living conditions (5) France : condition de vie - manque de moyens financiers pour 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% D1 D2 D3 D4 D5 D6 D7 D8 D9 D10 Déciles de revenu vêtements/chaussures Bonne température Viande Vacances Meuble Recevoir Taux de pauvreté

Subjective poverty (1) Households financial hardships % of households INCOME Hard or very hard to live on current income 14 Current situation: falling into debt (or living on capital) 11 Income less than or equal to minimum necessary income 36 FALLING BEHIND ON PAYMENTS Rent, housing service, utilities, heat 7 Other expenses (including taxes) 9 Source: European Panel, 2001, INSEE. Weighted data (cross-sectional weighting)

Subjective poverty (2) France : Indicateurs subjectifs 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% D1 D2 D3 D4 D5 D6 D7 D8 D9 D10 Décile de revenu par uc endettement Revenu minimum nécessaire < revenu actuel Revenu permet de vivre diff icilement Taux de pauvreté

Who is poor? (Logit) 1 Income Living conditions Subjective Occupation Farmer 0.86-0.13-0.26 Self-employed - 0.11-0.64 0.45 Management and professions - 1.1-0.46 0.01 Intermediate professions non-manual workers) - 0.83-0.19 0.10 Skilled manual workers - 0.5-0.08 0.25 Unskilled manual workers Ref. Ref. Ref. Others 0.17-0.19-0.23 Educational attainment Primary or no education 0.44 0.33-0.07 Basic vocational education Ref. Ref. Ref. Secondary - 0.22-0.15 0.07 Tertiary - 0.21 0.06-0.09 Residence Rural area 0.03-0.91-0.71 Small or medium-sized town (pop. <100,000) - 0.02-0.40-0.33 Large town (pop. >100,000) Ref. Ref. Ref. Age Under 30 0.58 0.05-0.24 30 to 39-0.34 0.04-0.05 40 to 49 Ref. Ref. Ref. 50 to 59 0.23-0.33 0.10 60 to 69 0.47-0.35-0.64 70 or over 0.19-0.75-1.54

Who is poor? (Logit) 2 Household type Single man 0.53 1.84 0.43 Single woman 0.58 1.65 0.74 Couple - 0.11 0.59-0.03 Couple with one child - 0.05 0.31 0.32 Couple with 2 children Ref. Ref. Ref. Couple with 3 or more children 1.28-0.02-0.04 Lone parent 1.74 0.61 0.64 Other households 0.1 0.91 0.14 Health Household with no disability Ref. Ref. Ref. Household with disability 0.21 0.52 0.38 Unemployment Household with no unemployed persons Ref. Ref. Ref. Household with one or more unemployed 1.18 0.47 0.15 Income (Deciles) D1 // 0.85 1.13 D2 // 0.28 0.54 D3 // Ref. Ref. D4 // - 0.67-0.02 D5 // - 0.77-0.40 D6 // - 0.62-0.60 D7 // - 1.06-1.19 D8 // - 1.38-1.41 D9 // - 2.52-1.60 D10 // - 2.18-2.09

Different types of poverty: multidimensional aspects The three types of poverty (income, living conditions and subjective) are distinct The intersection of the bottom 10% on each scale represents less than 2% of households

Co-occurrence of poverty types Occurrence des formes de pauvreté Année 2001 - ECHP Taux En % ménages Taux monétaire 50 % 11,7 Taux monétaire 60 % 18,6 Taux conditions de vie 9,8 Taux subjectif 12,4 Aucun symptôme 78,1 Pauvreté monétaire uniquement 7 Condition de vie uniquement 5 Subjective uniquement 4 Monétaire et condition de vie 2 Subjective et condition de vie 1,3 Monétaire et subjective 1,5 Monétaire, subjective et condition 1,1

Who suffers from more than one type of poverty? (Logit) 1 One type 2 types 3 types Occupation Farmer 0.52 0.74 0.74 Self-employed - 0.27 0.18-0.76 Management and professions - 0.57-2.28-3.17 Intermediate professions, non-manual workers - 0.42-0.51-1.15 Skilled manual workers - 0.14-0.17-0.48 Unskilled manual workers Ref. Ref. Ref. Others 0.03-0.18-0.23 Educational attainment (1) Primary or no education 0.23 0.42 0.83 Basic vocational education Ref. Ref. Ref. Secondary 0.03-1.03 0.27 Tertiary - 0.30-0.15 0.18 Residence Rural area - 0.09-0.42-1.87 Small and medium-sized towns (pop. under 100,000) - 0.13-0.13-0.58 Large towns (pop. over 100,000) Ref. Ref. Ref. Age Under 30 0.55 0.42-0.05 30 to 39-0.06-0.03-0.28 40 to 49 Ref. Ref. Ref. 50 to 59 0.10 0.09-0.27 60 to 69 0.12-0.18-0.12 70 and over 0.18-0.91-2.95

Who suffers from more than one type of poverty? (Logit) 2 Household type Single man 0.48 1.79 0.30 Single woman 0.62 1.72 0.76 Couple - 0.21 0.42-0.26 Couple with one child 0.20 0.02-0.42 Couple with 2 children Ref. Ref. Ref. Couple with 3 or more children 0.42 1.19 0.44 Lone parent family 0.85 1.89 1.47 Other households 0.11 1.01-0.55 Health Household with no disabled Ref. Ref. Ref. Household with disabled 0.22 0.74 0.66 Unemployment Household with no unemployed persons Ref. Ref. Ref. Household with one or more unemployed 0.48 1.08 1.23

Different types of poverty: different phases in a process? Non-correlation could stem from nonsimultaneous occurrences of events Different types of poverty are successive phases in a process: Subjective poverty is a leading indicator Followed by poor living conditions Followed by income poverty Followed by social exclusion Followed by receiving minimum welfare benefits This enables us to interpret the causality graph (in econometric terms)

Data quality and accuracy of findings Measurement errors create many false transitions into and out of poverty: we considered that 2/3 of the transitions from one year to the next are artefacts according to the error correction model used, the transition rate decreases by about 40% to around 10% to 15% for both income poverty and poor living conditions The corrections don t really increase correlation between different types of poverty (from 0.26 to 0.32 for the correlation between income poverty and poor living conditions => It is important to use longitudinal controls in the panels