The Dynamics and Persistence of Poverty in Luxembourg

In Luxembourg, household size and composition are associated with poverty. A salient fact of the Luxembourgish poverty profile is that individuals living in households with children are at higher risk of poverty than individuals living in households without children. There are two reasons why this situation is of concern. First, given the generous Luxembourgish family policy and child benefits, it van be interpreted as a failure of the welfare state. Second, it implies that many children live in poverty which is a situation of worry given its known adverse consequences on children's future outcomes in terms of health, school performance or labour market success. The size of these adverse consequences on children depends on the nature of the poverty experienced and more specifically on the length of tome spent poor: long periods of poverty are more problematic than a single year spent in this situation. Henceforth, there is a need to understand whether a longitudinal analysis of poverty would yield the same results as the worrying cross-sectional situation. Tackling this issue is precisely the aim of the PersiPov project. The main aim of PersiPov is to carry out research on poverty dynamics in Luxembourg,a country where this type of analysis is lacking. More specifically, we want to analyse the impact of the presence of children (number and age) on poverty transitions and persistence in Luxembourg.
Our first research question is: what is the impact of the presence of children of different age on income poverty dynamics in Luxembourg? Answering this question will allow determining whether the presence of children impact on the provability of entering or exiting income poverty and whether the presence of children is associated with transitory or permanent poverty. In addition to the estimation of this impact, predictions of the length of time spent poor for children will be computed. The presence of children is likely to impact not only the status of income poverty but also the subjective perception of individuals about their situation. This is why comparing the impact of the presence of children on subjective poverty dynamics, a relevant approach when studying poverty in a rich country, with its impact on income poverty dynamics is likely to yield interesting results. our second research question is: Does the analysis of subjective income poverty dynamics lead to the same conclusions in Luxembourg ? Because the presence of children is likely to affect simultaneously income poverty and subjective poverty, we will model the dynamics of both processes simultaneously. Finally, the macroeconomic context individuals are living in certainly affects the relationship between the presence of children and poverty dynamics in income and subjective poverty. The third research question is: Is this impact similar in Luxembourg and in other European Union countries with respect to income poverty dynamics when taking into account a marcroeconomic factor such as social expenditures ?
Despite the availability of required data, little is known about the dynamics of poverty in Luxembourg. PersiPov will contribute to filling this gap. This is especially important in the current period of economic crisis which led the government to recently announce the need to implement austerity measures, including the reduction of some family benefits.