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Luxembourg Income Study Working Paper Series Luxembourg Income Study Working Paper Series Working Paper No. 303 Measuring Well-Being and Exclusion in Europe's Regions Kitty Stewart March 2002 Luxembourg Income Study (LIS), asbl Measuring Well-Being and Exclusion in Europe’s Regions Kitty Stewart Contents Editorial Note and Acknowledgements.............................................................................iii Abstract ...................................................................................................................................iii 1. Introduction.................................................................................................................... 4 2. Regions: what and why? .............................................................................................. 5 3. Choice of indicators – and how do we measure disparity? .................................... 8 4. Material well-being ..................................................................................................... 12 5. Productive life.............................................................................................................. 22 6. Education...................................................................................................................... 27 7. Health............................................................................................................................ 30 8. Social participation...................................................................................................... 36 9. Conclusions .................................................................................................................. 38 References .............................................................................................................................. 43 CASEpaper 53 Centre for Analysis of Social Exclusion March 2002 London School of Economics Houghton Street London WC2A 2AE CASE enquiries – tel: 020 7955 6679 i Centre for Analysis of Social Exclusion The ESRC Research Centre for Analysis of Social Exclusion (CASE) was established in October 1997 with funding from the Economic and Social Research Council. It is located within the Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) at the London School of Economics and Political Science, and benefits from support from STICERD. It is directed by Howard Glennerster, John Hills, Kathleen Kiernan, Julian Le Grand, Anne Power and Carol Propper. Our Discussion Paper series is available free of charge. We also produce summaries of our research in CASEbriefs, and reports from various conferences and activities in CASEreports. To subscribe to the CASEpaper series, or for further information on the work of the Centre and our seminar series, please contact the Centre Administrator, Jane Dickson, on: Telephone: UK+20 7955 6679 Fax: UK+20 7955 6951 Email: [email protected] Web site: http://sticerd.lse.ac.uk/Case Kitty Stewart All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including notice, is given to the source. ii Editorial Note and Acknowledgements Kitty Stewart is a STICERD Post-Doctoral Fellow at CASE. She can be contacted at [email protected]. The author is grateful to John Hills, Tony Atkinson, Tania Burchardt, John Micklewright and participants at a STICERD Work in Progress seminar for comments and suggestions. Abstract The Lisbon summit of the European Council in March 2000 declared the number of people living in poverty and social exclusion in the European Union to be unacceptable, and called for steps to tackle the issue, beginning with the setting of targets for particular indicators. The targets suggested have been broad in nature but have largely concentrated on national averages. This paper seeks to marry this approach with the EU’s traditional focus on regional cohesion, by developing regional indicators of well-being and exclusion for EU countries. It draws on a range of sources to put together indicators in five dimensions of well-being: material well- being, health, education and participation in two spheres – productive and social. It explores, first, how far national indicators disguise geographical inequalities in these different dimensions; and second, the extent to which regional performance differs according to which dimension is being examined. At the same time, the paper draws attention to the limits of currently available data, in light of the fact that one key aspect of the Lisbon summit conclusions was a commitment to the collection of better data on poverty and social exclusion in the EU. Keywords: regional disparities, EU, well-being, exclusion. JEL classification: I00, I31, I32, R20. iii 1. Introduction The EU has long been committed to greater social cohesion in Europe. The Maastricht Treaty of 1992 called prominently for the ‘strengthening of economic and social cohesion’ so as to promote the Union’s ‘overall harmonious development’ (Articles 2 and 130a). Cohesion in this context has been understood to refer to regional disparities: a series of regional policies and funds have aimed to raise average incomes in poorer regions up to the EU mean, while the European Commission’s series of Cohesion Reports (European Commission 1996 and 2001) have focused heavily on regional indicators. More recently, however, there has been a move towards a greater focus on poverty and social exclusion at individual level, culminating in the Lisbon summit of the European Council in March 2000. The summit conclusions declared the number of people living in poverty and social exclusion in the EU to be unacceptable, and called for decisive steps to tackle the issue, beginning with the setting of national targets for particular indicators. The Social Agenda subsequently agreed at the Nice summit in December 2000 called on member states to draw up national plans of action for tackling social exclusion, and in Stockholm in March 2001 the Commission presented a provisional set of target indicators for the EU as a whole. After an extensive consultation process, a revised list of indicators was adopted at the Laeken Summit in December 2001. This paper calls for a marriage of these two approaches. The Cohesion Reports are regionally focused but stick to very traditional measures of well-being – largely regional GDP and employment measures. The indicators agreed in Laeken are much broader in nature, spanning a number of diverse aspects of life, but they are almost exclusively to be measured at national level (Social Protection Committee, 2001). One indicator, the coefficient of variation of regional unemployment rates, has been included to track regional disparities. The need for greater information about internal disparities in social indicators was broached in a report commissioned by the Belgian Presidency of the EU to aid the debate: Atkinson et al. (2002) argued that concerns about regional differences arise for all dimensions of social cohesion and that there is no justification for giving primacy to unemployment or any other single indicator. They suggested that a better way of keeping geographical inequalityhighupontheagendawouldbetotrack regional disparities (subject to data availability) in each of the measures suggested as national indicators, along with breakdowns by other key variables such as gender. While the Atkinson report was in general very influential in shaping the final choice of indicators, this particular proposal appears to have been overlooked. This paper, however, attempts to put it into practice. It explores regional disparities in a range of different cohesion measures, and looks at the correlation between different indicators. It asks, first, how far national average figures disguise regional pockets of deprivation on different indicators; and second, how far performance on different measures overlaps. The motivation for the second question is twofold. We want to know whether there are regions which suffer from multiple deprivation, and where these regions are; and we want to see how reasonable it is to use just one measure as a proxy for deprivation in other spheres. 4 Data constraints loom large in a regional study, and ‘subject to availability’ turns out to be a significant caveat. Many of the indicators we might like to track are simply not available by region, while household surveys often do not contain regional samples large enough to be helpful. The paper is upfront about these constraints. Indeed, one key aspect of the conclusions of the Lisbon summit was a commitment to the collection of better data on poverty and social exclusion in the EU, so identifying the limits of currently available data in itself seems a timely and useful exercise. At the same time, while there are many holes in the picture, there is still much that can be said about the pattern of regional disparity across the EU, and of the degree to which the story changes when different indicators are examined. The following section discusses the importance of looking at regional disparities at all and the level of region at which the paper’s analysis takes place. Section 3 looks at the choice of indicators used in the paper and highlights the question of measurement. Sections 4 to 8 each examine indicators in one domain of well-being, while Section 9 provides an overview and some conclusions. 2. Regions: what and why? Why is cohesion between regions important? The first question that needs to be addressed is why
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