Simulating Poverty in Europe: The Potential Contributions of Employment and Education to Reducing Poverty and Social Exclusion by 2020

30 Pages Posted: 20 Apr 2016

See all articles by Mohamed Ihsan Ajwad

Mohamed Ihsan Ajwad

World Bank - Human Development

Kenneth Simler

CGIAR - Food Consumption and Nutrition Division

Mehtabul Azam

Oklahoma State University - Stillwater; IZA Institute of Labor Economics

Basab Dasgupta

World Bank

Misha Bonch-Osmolovskiy

Independent

Irena Maria Topinska

University of Warsaw - Faculty of Economic Sciences

Date Written: October 1, 2013

Abstract

This paper sheds light on the impact of improving employment and education conditions on poverty and social exclusion indicators. More specifically, it answers the following question: Will achieving the Europe 2020 national targets on employment and education lead countries to achieve the Europe 2020 poverty and social exclusion target with no other policy interventions? The paper presents a simple partial equilibrium model that is flexible enough to be implemented in a number of different settings and uses widely available household survey data. The simulation model analyzes poverty and social exclusion outcomes in response to changes in education completion rates and employment rates. The model is applied to ten of the European Union's new Member States -- Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia -- and the model's performance is evaluated through a validation exercise. The Europe 2020 national employment targets are ambitious in many of the new Member States, given historical employment patterns in the countries. Especially in light of the slow and uncertain recovery, labor markets remain weak and employment rates in 2020 could fall short of rates targeted by national policy makers. In this eventuality, the poverty and social exclusion goals may not be reached in many of the new Member States without additional policy measures.

Keywords: Rural Poverty Reduction, Health Systems Development & Reform, Labor Policies, Achieving Shared Growth, Poverty Monitoring & Analysis

Suggested Citation

Ajwad, Mohamed Ihsan and Simler, Kenneth and Azam, Mehtabul and Dasgupta, Basab and Bonch-Osmolovskiy, Misha and Topinska, Irena Maria, Simulating Poverty in Europe: The Potential Contributions of Employment and Education to Reducing Poverty and Social Exclusion by 2020 (October 1, 2013). World Bank Policy Research Working Paper No. 6660. Available at SSRN: https://ssrn.com/abstract=2341376

Mohamed Ihsan Ajwad (Contact Author)

World Bank - Human Development ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
202-473-7861 (Phone)

Kenneth Simler

CGIAR - Food Consumption and Nutrition Division ( email )

Washington, DC 20006-1002
United States

Mehtabul Azam

Oklahoma State University - Stillwater ( email )

Stillwater, OK 74078-0555
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Basab Dasgupta

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Misha Bonch-Osmolovskiy

Independent

No Address Available

Irena Maria Topinska

University of Warsaw - Faculty of Economic Sciences ( email )

Dluga Street 44/50
Warsaw, 00-241
Poland

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