DECOMPOSING VULNERABILITY TO POVERTY

This paper applies the decomposition of the Foster-Greer-Thorbecke poverty index to the measurement of individual vulnerability to poverty. I highlight that poverty risk can be expressed as a function of expected incidence, expected intensity, and expected variability below the poverty line, three essential aspects for improving the design of appropriate risk-management policies. An empirical illustration is provided using the British Household Panel Survey and the Italian Survey on Household Income and Wealth.