Reports 2013/32

The economic welfare of low-income households, 2013

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In recent years, the development in income and living conditions for the majority of the Norwegian population has been very good. This report, on the other hand, focuses on the economy and living conditions of various groups that are known to be overrepresented at the bottom of the income distribution. This applies for example to social assistance recipients, single parents, immigrants and recipients of various social security benefits. The living conditions for these groups are measured by various indicators that seek to illustrate economic difficulties, interest and debt burden, economic activity, housing economy as well as health conditions.

The proportion of persons with low income is affected by how the low income threshold is defined. Based on the EU-definition, which is the most frequently used in Europe, 9.6 per cent of the population had an income below the annual poverty line in 2011. Low income is according to this definition a household income per consumption unit lower than 60 percent of the median income of the population. The proportion of persons with low income using the EU measure, had a slight increase in 2011 compared with the previous year.

Some people experience only a short period of low household income. Accordingly, fewer persons have persistent low income, compared to annual low income. If we define persistent low income based on the average household equivalent income in the three-year period 2009-2011, 7.7 per cent of the population had persistent low income using the EU measure. The proportion with persistent low income (EU-definition) has remained stable at approximately 8 per cent for years. However, the proportion with persistent low income has shown a decreasing trend since 2006.

Many people that at one point in time belonged to a low-income group experience a substantial improvement in their financial situation with the passage of time. Results based on panel data indicate that income mobility the following years is substantial for many of those that initially belonged to a low-income group. Among those with the strongest income mobility we find young singles and single parents.

By studying mobility in living conditions among those persistently belonging to low income groups, we also find a high degree of stability, but fewer experience problems with housing costs in 2012 than in 2010. Dwelling conditions have improved from 2010 to 2012 for singles, and especially for young singles. Young singles also seem to increase their participation in the labour force. Moreover, it seems that stable social assistance recipients have a better financial situation in 2012 than in 2010.

In a European perspective, Norway has a small proportion of the population with relative low income. The Norwegian low income threshold is among the highest in Europe, even after adjusting for differences in national price levels.

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