Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161014
Authors: 
Kuypers, Sarah
Marx, Ive
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 10391
Abstract: 
Most poverty studies build on measures that take account of recurring incomes from sources such as labour or social transfers. However, other financial resources such as savings and assets also affect living standards, often in very significant ways. Previous studies that have sought to incorporate assets into poverty measures suggest that (1) poverty estimates including wealth are considerably lower than income‐based measures; (2) poverty rates of the elderly are more affected than those of the nonelderly and (3) poverty rates are especially affected by the household's main residence. This paper assesses the sensitivity of these conclusions to various plausible alternative assumptions, such as the poverty line calculation, the types of assets included in the wealth concept and choices with respect to the equivalence scale. Moreover, we check whether the impact of alternative assumptions is consistent across age and institutional settings. To that effect we compare Belgium and Germany, two countries with similar living standards and income poverty rates, but very different levels and distributions of wealth. Using data from the HFCS we show that accounting for wealth affects the incidence and age structure of poverty in a very substantial way. Country comparisons are also affected in very substantial ways.
Subjects: 
income
wealth
poverty measurement
sensitivity analysis
JEL: 
I32
Document Type: 
Working Paper

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