Policy Briefs 2023
Perceptions of inequality and fairness: what has changed over the past 5 years?
- According to a recent Eurobarometer survey, 81% of EU citizens believe that income inequality is too high. While remaining high, the level of concern about income inequality is slightly lower than in 2017 (85%).
- Despite the COVID-19 crisis, income inequality concerns decreased for most socio-economic groups. This drop was largest for older individuals and those living in rural areas.
- In contrast, the perception of life fairness has declined in the past 5 years: the share of individuals agreeing that things that happen in their life are fair decreased from 51% in 2017 to 38% in 2022.
- Fairness perceptions diminished especially among young people and students, but less so among lower-educated individuals and those with financial difficulties.
- The direct economic consequences of the COVID-19 pandemic do not seem to be the major cause of the decrease in fairness perceptions. Potential drivers include uncertainties about the future, perceived inequality of opportunity, and discontent with measures taken to contain the COVID-19 pandemic.
Preferences for redistribution and social policies in the EU
- According to a recent Eurobarometer, 81% of EU citizens perceive income inequalities as too great.
- Support for greater redistribution is high (77% of EU citizens) and correlates with perceived inequalities and preferences for more spending in social policies.
- Most EU citizens favour additional spending on social policies, especially in southern EU countries.
- Increased spending on healthcare and long-term care is the top priority in almost all countries, followed by education, pensions, housing and then income support and family and unemployment benefits.
- Most believe that additional social spending should be financed by increasing households’ tax burden (51%), with alternatives being reducing other public expenditure (15%), increasing public deficits (12%) or not increasing social spending (16%).
Policy Briefs 2022
The employment effects of reductions in working time in Europe
- There is a controversial debate on the employment impact of reductions in working time. This debate dates back to the early days of the trade union movement.
- Although standard economic models suggest that a reduction of working time at full salary should reduce overall employment, some support the idea that work can be redistributed and hence that a shorter work week could lead to higher employment.
- An empirical analysis of the reforms of usual working hours that took place in EU Member States since the late 1990 shows that the fall in hours worked did not result in any changes in employment (i.e. there was neither an increase nor a decrease in employment).
Can schools mitigate young people from feeling lonely: An analysis across Europe
- Young people’s levels of loneliness are increasing and this has important short- and long-term consequences for their current and future well-being and career prospects.
- Across 23 European countries, 13% of adolescents feel lonely in school. This varies from 7% to 26% between countries.
- The school environment can account for 22% of the total variation in loneliness in 15-year-olds, indicating that schools have an important role to play in mitigating students’ loneliness.
- Loneliness levels are higher in schools that do not have a cooperative environment. Children in urban schools and schools where there is a higher proportion of students who do not have basic reading skills are also lonelier.
- The most significant factor for predicting loneliness is adolescents’ experiences in school. Being bullied significantly increases students’ risk of feeling lonely. Unsupportive teachers and repeating school years are also associated with higher levels of loneliness.
- At a family level, parental support can significantly help combat adolescents’ loneliness. First generation immigrants and girls have a higher risk of being lonely in school.
Loneliness among older adults - A European perspective
- Older adults are particularly vulnerable to loneliness because they are more likely to experience life transitions and disruptive life events that exposes them to a higher risk of feeling lonely.
- Loneliness in later life becomes particular relevant in our ageing society and deserves the attention of policy makers. It not only affects individual well-being but it might trigger adverse consequences at societal level, including reduction in social cohesion and community trust and ultimately economic growth.
- The incidence of loneliness among Europeans aged 50+ is relatively higher in Southern and Eastern Europe (between 31 and 46%), than in Western and Northern European countries (between 10 and 30%). A similar pattern emerges when considering the incidence of severe loneliness across EU Member States.
- Social distancing and shutdowns during the COVID-19 pandemic have exacerbated feelings of loneliness among people, including older adults. The percentage of older Europeans who reports feeling more lonely after the outbreak of COVID-19 than before ranges from 20 to 60%, depending on the country.
- Among the main risk factors for loneliness, a person's living arrangements and financial wealth play a prominent role. Moreover, in later stages of life, loneliness represents a major risk factor for physical and mental illness. However, there are important variations across countries that remain hidden when performing an analysis at EU level.
- Although many loneliness interventions targeted at older individuals already exist, a more collaborative effort is needed to identify best practices and develop better targeted interventions that also account for cross-country differences across EU.
Division of Childcare and Housework among Men and Women during COVID-19 lockdowns
- Housework responsibilities increased greatly in European households during the COVID-19 lockdowns. The increase in childcare responsibilities was particularly significant. This put a massive burden on working parents, especially mothers.
- Although many fathers contributed as well, mothers were far more likely to increase their workload. Mothers also increased their workload by more hours than fathers. As a result, the gender gap measured in the number of hours spent on unpaid duties shows a significant increase when compared to the period before the pandemic.
- None of these gaps can be explained by dissimilarities in men’s and women’s working conditions, or by the time availability of men and women in general. Instead, it is very likely that traditional gender roles continue to play a crucial role in shaping the division of work between the partners.
- If experienced for a prolonged period, the extreme double burden of paid employment and work in the home can have detrimental effects both for wellbeing and employment. It therefore requires policy attention.
- Although mothers were worse affected, attention also needs to be paid to those fathers that made significant contributions to work in the home.
Options for socially just and effective climate policies – a microsimulation for 27 EU countries
- Evaluations of climate policies should not only focus on the emission reductions that these policies achieve. Evaluations should also pay attention to the distribution of related costs and benefits across social groups and the policies’ impact on fuel and transport poverty.
- Carbon taxes on home energy and motor fuels are regressive. This is because they put a higher financial burden – relative to income – on poorer households than they do on richer households.
- Redistributing carbon-tax revenue using equal per-capita tax rebates can remedy that regressive impact. This would benefit low-income and disadvantaged households.
- However, if these tax rebates lead to additional consumption with a high carbon footprint, they risk partially cancelling out expected emission reductions.
- Combining carbon taxes with additional public investment in green services (such as renewable energy and public transport) can considerably speed up decarbonisation.
- Providing everyone in society with an equal amount of such green services (e.g. using vouchers) is as redistributive as tax rebates. However, it has the added advantage of reducing fuel and transport poverty.
Policy Briefs 2021
Loneliness in Europe before and during the COVID-19 pandemic
- The COVID-19 pandemic has magnified already worrying levels of loneliness in Europe. Survey data show that the proportion of EU citizens feeling lonely more then half of the time doubled in the first months following the COVID-19 outbreak.
- Young adults have been hit most severely by social distancing measures. The share of people aged 18-25 reporting that they frequently felt lonely almost quadrupled in the first months of the pandemic (April-July 2020). The prevalence of loneliness among older people (65+), who were the most lonely in 2016, also increased over the same period, but less sharply.
- Living alone has made social distancing measures more painful. People living alone experienced an increase in the prevalence of loneliness of more than 22 percentage points compared with levels observed in 2016. In comparison, the incidence of loneliness among those living with partner, children or both increased by 9 percentage points.
- People who find difficult to make ends and those in poor health are at greater risk of loneliness. This was true before and during the pandemic.
- Females are about as likely as males to feel lonely, regardless of time period.
- There is no sign of a rural-urban divide. Living in cities or in a rural area does not make a significant difference in measured levels of loneliness.
Policy Briefs 2020
Globalisation, China and income inequality in Europe
- After having decreased during the 1990s, income inequality increased during the 2000s in more than two-thirds of the regions of EU15 countries.
- The growth of trade pressure from China on EU15 regions started to accelerate rapidly when China joined the WTO in 2001, doubling first by the outbreak of the 2009-2012 crisis, and once again by its end.
- The increase of trade pressure had a significant impact on inequality within EU15 regions. As compared with a hypothetical ‘no-accession baseline’, income inequality is about 9% larger in 2011, whereas the estimated impact typically makes up around 40% of the actual increase in inequality observed since 2000.
Educational inequalities in Europe and physical school closures during Covid-19
- During physical school closures, home resources and parental involvement in school work are of great importance for learning success. However, these benefits are not available equally to all children.
- In half of the 21 European countries examined, 4th grade pupils from lower socio-economic backgrounds are at best half as likely to have access to the internet as their more advantaged peers.
- Children with lower socio-economic status are more likely to lack reading opportunities and a quiet room in most European countries. In addition, parental support during school closure may differ by socio-economic status.
- On average, children who lack resources and support were already lower performers before the crisis, and they are likely to have lost further ground during the Covid-19 school closures, leading to an increase in European educational inequalities.
Do robots really destroy jobs?
- New JRC research discusses the effect of the deployment of industrial robots on employment in the EU. It finds that, even though the share of low-skilled workers declined over the analysed period (1995-2015), there is no evidence that industrial robots contributed to this trend.
- Instead, there is a significant positive association between robot use and total employment. This correlation is most pronounced in the manufacturing sectors but still holds when non-manufacturing sectors are included.
- This suggests that robot-adopting industries have so far been comparatively more resistant to the long-term downward trend in the employment shares of European manufacturing sectors.
- These results stand in contrast to some previous literature and to the widespread notion that robots crowd out workers in general, and low-skilled workers in particular.
- These findings, based on current industrial robot technologies only, cast doubt on the effectiveness of policies such as taxes on robots, which could have unintended negative effects on technical progress and few benefits for workers.
Income distributions in the EU: gains, losses and convergence
- Between 2007 and 2014 income levels across Europe converged, to the apparent advantage of the poor. However, this convergence was mostly due to the ‘catching up’ process in Central and Eastern Europe.
- Within all three major geographic regions of the EU, income growth was weakest at the lower end of the income distribution.
- As a result of EU-wide and region-specific changes, income levels in Southern Europe first converged towards and then diverged from the EU-wide income distribution, while those in Central and Eastern Europe steadily converged towards it.
- Regarding income inequality, distributions of income in Central and Eastern and Southern Europe became very similar, both to each other and to the distribution of income in the EU as a whole; however, the gap between those geographic regions, and between them and the EU, remains sizeable in terms of income levels.
Policy Briefs 2019
The unbearable intangibility of the Internet: taxing companies in the digital era
- JRC research provides new evidence of mismatches between the location of economic activity and the place of taxation for large web-based enterprises in the EU.
- A large concentration of turnover and profit is found in low-tax jurisdictions, while the underlying economic activity is much more evenly distributed across EU states.
- This hints at potentially large profit shifting for tax avoidance purposes by web-based companies, and provides evidence of structural weaknesses in the existing international corporate tax system.
Socio-economic background and educational inequalities
- Policies that decrease educational inequalities are likely to also reduce societal inequalities.
- Comparing nine OECD countries over 12 years, sizable improvements for disadvantaged 15-year-olds were only found in Germany.
- Tracking of children increases educational inequalities; high quality, publicly funded pre-school decrease educational inequalities.
- Raising national achievement levels concurrently as socio-economic performance gaps are reduced remains a pressing challenge for policymakers.
- Systematic educational evaluation and data can improve our understanding of the interplay among educational policies, practices and inequalities.
Like (grand)parent, like child? Multigenerational persistence of socio-economic status in the European Union
- New Eurobarometer data show that about 74% of individuals whose parents have completed higher education go on to complete higher education themselves, compared to only 28% of those with less highly educated parents.
- Individuals’ fortunes are also shaped by the socio-economic background of their grandparents. Persistence of educational attainment increases by around 9 percentage points when considering the influence of grandparents.
- Persistence of educational attainment across three generations is lowest in Northern Europe.
- Inequalities related to socio-economic background have largely remained persistent over time in Europe.
- The dynamics of persistence of educational attainment are similar for men and women.
Income inequality and support for redistribution across Europe
- About 360 million European adults (82%) consider that their governments should take measures to reduce income inequality.
- Public demand for government action is proportionate to the actual level of income equality in a country.
- The greater the income gap between the middle class and the rich, the more support there is for redistributive policies.
- Individuals who believe that society is basically meritocratic and that everyone enjoys equal opportunities are less likely to support redistributive policies.
Sensing global patterns of inequality from space
- The combination of Earth Observation and population data produces new information that describes inequalities across the globe in an original, objective and spatially distinct way.
- The new information contributes to a better understanding of the spatial distribution of wealth and poverty around the globe.
- The approach has potential for the monitoring and detection of changes in spatial patterns of inequality.
Studying abroad - benefits and unequal uptake
- Student mobility has a positive impact on career progression and increases the uptake and completion of postgraduate studies, especially for students from lower socio-economic backgrounds.
- The benefits of student mobility are unequally distributed, since individuals with less advantaged backgrounds are less likely to study abroad.
- Student mobility is more common at universities with a greater share of
students from advantaged socio-economic backgrounds.
- Student mobility could become more inclusive if grant funding and incentives
targeted universities with a high proportion of less advantaged students.
EU employment from 2000 to 2014: factors behind (uneven) sectoral and regional dynamics
- Following the economic crisis, the pace of labour reallocation towards the service sector slowed down, adversely affecting EU employment growth.
- Unemployment rose in Southern Europe as a result of demand weakness exacerbating lower levels of participation in value chains.
- Job creation in Central and Northern Europe continued to thrive, due to an active service sector and limited losses in external competitiveness.
- A differentiated picture emerges for countries which have joined the EU since 2004; those more integrated in EU value chains made a more successful structural transformation and reaped the benefits of gains in productivity.
European's perception of fairness
- More than one in ten (11%) people in the EU perceive their lives as unfair, and more than one quarter (26%) view their country as unfair.
- People have the most positive perceptions of fairness in Ireland, Austria, Denmark and Luxembourg.
- Perceptions of fairness increase with income and decline with age.
- The unemployed are less likely to view their lives or country as fair than people who have a job.
- Europeans’ happiness is linked to how fair they consider their lives and their country to be.
Like marries like
- The sharp decline, since the turn of the millennium, in the proportion of individuals cohabiting with or married to a partner with a different level of educational attainment may be a sign of the weakening of the 'social glue'.
- A 'preference for homogamy' has been on the rise in five countries analysed (France, Hungary, Portugal, Romania and the USA).
- Some of the commonly used indicators of homogamy obscure these trends.
Increasing progressivity in flat-tax countries: potential positive equity and efficiency impacts
- From the 1990s onwards several countries in Central and Eastern Europe introduced flat personal income tax schedules to improve economic efficiency and tax compliance. However, flat tax systems raise concerns regarding their redistributive capacity.
- A recent JRC study shows that moving from flat to more progressive personal income tax schedules can have positive effects on both equity and efficiency, leading to reductions in income inequality and even to modest increases in employment and GDP.
- As there seems to be no strong trade-off between efficiency and equity, significant improvements could be achieved in income equality without hindering economic performance.
The fiscal and social cost of tax evasion: the impact of underreporting of income by the self-employed
- Recent analysis shows that underreporting of income by the self-employed may be relatively high, ranging from 10% to 43% of the income reported by the employed, in a sample of European countries.
- JRC work suggests that such levels of income underreporting by the self-employed may produce budgetary losses of up to 1.6% of GDP.
- This form of tax evasion typically also has negative distributional implications, due to the high concentration of self-employment income in the higher income groups and the progressivity of tax systems.
Old welfare in new labour markets? The social protection of atypical workers
- Non-standard forms of work are increasingly common across Europe, raising doubts about the capacity of existing tax-benefit systems to provide adequate social protection to all types of worker.
- Guaranteeing adequate social protection to atypical workers is a priority for the EU and included in the European Pillar of Social Rights.
- Atypical workers are in general less well protected than traditional employees in the event of unemployment, as their access to unemployment insurance schemes is limited. This is also reflected in their greater exposure to poverty risk, both when unemployed and when in work - 25% of atypical employees and 20% of the self-employed are at risk of poverty while in work.
- JRC simulations using the EUROMOD model show that extending unemployment insurance to the self-employed would significantly improve their income protection and lessen their exposure to the
- risk of poverty in the event of unemployment.
The budgetary and redistributive effects of wealth-related taxes
- Many EU countries show renewed interest in the use of wealth-related taxes as instruments to reduce the high tax burden on labour, improve public finances and foster fairness in the tax system.
- JRC research on a selected group of EU countries finds that the redistributive effects of wealth-related taxes, as currently designed, are negligible.
- Revenue collection from wealth-related taxes differs widely in a sample of six EU countries. While wealth-related taxes in Belgium and France raise, respectively, about 3.5% and 4% of the value of GDP, the figure in Germany is only 1%.
Policy Briefs 2018
The Mediterranean poor: a key component of EU-wide income inequality
- Since the economic and financial crisis of 2008-12, income levels across the EU have declined, particularly in Mediterranean Member States. During the same period, income inequality remained mostly stable in the whole of the EU but has increased substantially in Mediterranean Member States.
- The increase in inequality in the Mediterranean area, which has reached levels not seen for almost two decades, is chiefly related to declining labour income for the less well-off.
- Inequality has increased, but at different rates, among both women and men in the Mediterranean, to the point of eliminating the previously existing gap between them in levels of inequality.
Loneliness – an unequally shared burden in Europe
- More than 75 million European adults meet with family or friends at most once a month and around 30 million European adults frequently feel lonely.
- Loneliness is more prevalent in Eastern and Southern Europe than in Western and Northern Europe.
- Poor health, unfavourable economic circumstances and living alone are all associated with higher rates of loneliness.
- Loneliness affects all age groups. Even though the elderly may be more socially isolated than other age groups, they do not report more frequent feelings of loneliness.
Brains and gains: innovation and income distribution in Europe
- The JRC conducted a systematic empirical analysis that sheds light on the innovation–inequality nexus in the European Union over the period 2004-2014.
- Innovation is associated with lower levels of overall income inequality.
- At the same time, innovation disproportionately benefits those with high incomes.
Each policy brief has been reviewed by the editorial board, a proofreader and at least two reviewers.
- Editorial board: Francesco Berlingieri, Sylke Schnepf, Elena Stepanova.
Reviewers to whom the editors and authors are grateful for their valuable comments: Martin Becker, Peter Benczúr, Federico Biagi, Zsuzsa Blaskó, Laura Cassio, Marco Colagrossi, Zsombor Cseres-Gergely, Tom De Groeve, Beatrice d'Hombres, Leandro Elia, Serena Fatica, Stefano Filauro, Sara Flisi, Gaelle Garnier, Andrea Geraci, Valeska Gronert, Enkelejda Havari, Athena Kalyva, Virmantas Kvedaras, Sven Langedijk, Anna Manca, Giuseppe Munda, Balázs Muraközy, Anna Naszodi, Frank Neher, Outi Niiranen, Philipp Pfeiffer, Giuseppe Piroli, Nicola Pontarollo, Roman Raab, Sylke Schnepf, Frank Siebern-Thomas, Tim Van Rie, Stefano Verzillo.