Cross-national differences in determinants of multiple deprivation in Europe

This paper analyses the relationship between deprivation, income and other individual dimensions over time, in eleven European countries, exploiting the longitudinal nature of the European Community Household Panel (ECHP). First, the determinants of deprivation are analysed by using individual fixed effects models for each country separately. Second, a decomposition of the deprivation gaps between countries highlights the main reasons for the differentials across Europe. The results show that changes in income and deprivation do not strictly coincide and highlight the importance of employment status and income sources. In countries where deprivation is higher income is more effective in reducing the deprivation differential. However, a relevant part of the deprivation gap is attributable to a country specific effect revealing the importance of unobserved factors like cultural attitudes and institutions.