EQUALITAS Working Paper No. 34 Poorer and More Deprived? Low Income and Material Deprivation Overlaps in Spain after the Great Recession

This study analyses how the economic crisis has modified the relationship between income and material deprivation in Spain, using data from the Living Conditions Survey 2004-2012. To this end, a material deprivation index is first defined, in order to overcome some of the limitations of the measure currently included in the Europe 2020 at-risk-of-poverty or exclusion indicator, and a multinomial logistic regression model is estimated using data from 2008 and 2012. The results demonstrate that the degree of overlap between low income and material deprivation has increased by around 50% in this period, even despite the offsetting effect of the reduction in the (relative) income poverty threshold. After identifying the most important factors explaining why some households are at greater risk of being deprived than of having only low income, we show that the Great Recession has produced a significant recomposition of the poverty profile in Spain. A result that is worth emphasizing is the increasing role played by long-term unemployment and by differences in tenure status of households in predicting the overlap between low income and material deprivation, four years after the bursting of the property bubble.