Abstract
The analysis uses seven waves from the German Panel Study Labor Market and Social Security (PASS) covering the period from 2006 to 2013. During the observation period, Germany experienced a significant increase in average real incomes and employment, accompanied by a decrease of absolute income poverty as measured by the at-risk-of-poverty rate anchored at a fixed moment in time. PASS collects information on material deprivation with a list of 26 possessions and activities. The article discusses the difficulties of measuring material deprivation and identifies several sources of measurement error and selection bias. However, even when controlling for such errors and biases, regression models for different deprivation indices show a significant downward trend in material deprivation for the German resident population. Given the simultaneous decrease in absolute income poverty, it is concluded that measures of material deprivation behave like absolute income poverty indicators if the list of possessions and activities is not updated to changed living standard standards in society. A similar downward trend is observed also for individuals receiving basic income support. Moreover, supported individuals report deprivation differently depending on survey mode and number of previous panel interviews, raising the question of measurement equivalence in this subgroup.
Highlights
Measures of material deprivation are an essential part of Eurostat’s regular statistical reporting on income and living conditions
Panel Study Labor Market and Social Security (PASS) is the best data source to analyze deprivation trends in Germany, because it collects on a yearly basis comprehensive information on 26 different possessions and activities, many more than the nine items that are used in official statistics of Eurostat and governmental poverty reports
The variables Xk include log equivalized household income in 2006 prices,19 household type (5 dummies), language used during the interview (1), residence in West or East Germany (1), UBII receipt at the interview date (1), number of UBII receipts at previous interview dates, age group of the reference person reporting on deprivation (5 dummies), gender (1), birth cohort (4), school leaving certificate (7), and training qualification of the respondent (10)
Summary
Measures of material deprivation are an essential part of Eurostat’s regular statistical reporting on income and living conditions. Collecting information about material deprivation is as difficult as collecting information on income and consumption and the decreasing trend may be a result of measurement error, e.g., if respondents increasingly give positive answers the more often they are asked for their possessions and activities. PASS is the best data source to analyze deprivation trends in Germany, because it collects on a yearly basis comprehensive information on 26 different possessions and activities, many more than the nine items that are used in official statistics of Eurostat and governmental poverty reports (for Germany see Bundesministerium für Arbeit und Soziales, o.J.). We will show that deprivation decreases in Germany in the observation period, even if one controls the socio-economic profiles of the respondents as well as possible measurement and selection errors during the process of data collection.
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