JOINT RESEARCH CENTRE - SEVILLE - EUROMOD-based analysis supports Eurostat’s ‘Flash estimates of income inequalities and poverty indicators for 2021’

Flash estimates of income inequalities and poverty indicators for 2021 were recently published. Prepared by staff of Eurostat, the report aims at providing up-to-date statistics on income poverty and inequality. These indicators are an essential tool for monitoring progress on the EU’s targets to address poverty and social exclusion and for key economic policy processes like the European Semester.

EUROMOD was used to simulate labour market transitions to unemployment and to short-term work schemes adopted in response to the pandemic, as well as the 2021 tax-benefit policies.

date: 02/08/2022

The main messages that can be drawn from the analysis are that, after the severe effects of the pandemic on household incomes in 2020, early estimates for 2021 show in general positive trends compared to the previous year. Flash estimates show an overall increase in the equivalised disposable income across the distribution for all EU countries. At-risk-of-poverty rates for the working age population (18-64) are estimated to decrease or remain stable for most countries; this finding is primarily related to the positive trends on the labour market, the gradual reduction in partial unemployment and the estimated increases in market incomes. Finally, 2021 flash estimates show a rather stable trend in income inequalities. This result is mostly driven by the general income increase in 2021 and the tax-benefit policies implemented during that year.