Abstract
The living cost gap refers to the differential amongst income, expenditures, and poverty lines. It is important since it addresses a number of aspects that point towards historic and continued living standards. The purpose of this study is to identify, measure, and compare the living cost gap in the Europe Union member states. Twenty-nine indicators/criteria from Eurostat and World Bank, covering the period 2008–2017, are employed. In order to rank and compare living cost gap by countries, objective functions for each criterion are defined and applied. The importance of each criterion is assessed independently. The composite living cost gap indicator for each MS is calculated using multiple criteria decision support methods. The relationship between the compound annual growth rates of this indicator and each single criterion is estimated and evaluated. The findings of the study suggest that living cost gap is higher where unemployment rates and households’ expenditure on basic needs (housing, food etc.), are larger, while living cost gap is lower where households’ income and expenditure on optional needs are higher. The living cost gap in the majority of countries tends to narrow/decrease, along with the increase in the household income and expenditures. Our research highlights the need to mitigate unemployment and households’ low net income in order to alleviate living cost gap. The analysis and assessment of living cost gap might help identifying the most vulnerable social profiles and groups, and hence might contribute to the adequate formulation and implementation of targeted policy responses and interventions at European Union, national, and regional level.
Highlights
Territorial inequalities have long been studied and dealt with in the literature and in policy [1,2,3,4,5,6,7,8], but still many research questions remained unanswered and many issues unsolved [9]
Our study shows that the largest expenditure of the average households was on housing and amounted to more than 20% of the net household income during the period 2008–2017 (Table A1)
The Living Cost Gap” (LCG) describes the difference between the income that households earn and what they need to live
Summary
Territorial inequalities have long been studied and dealt with in the literature and in policy [1,2,3,4,5,6,7,8], but still many research questions remained unanswered and many issues unsolved [9]. There is historical and continuous interest to analyse territorial disparities through new lenses and produce knowledge useful to understand the cost of living combining the characteristics of places and social connections [10]. An increasing divergence in living standards and costs is being recently observed across Europe, partially because much of Europe’s economic growth has been uneven, mostly occurring in larger regions [8,11]. The LCG challenge is important since it addresses a number of aspects that point towards a historic and continued living standards and expected stress-related behaviour when the living cost burden occurs [20,24,25,26,27] The notion ”Living Cost Gap” (LCG) refers to the differential amongst income [12,13], expenditure [14,15], employment [16,17,18], and poverty [19,20], usually aggravated by economic crises and recessions [20,21,22,23].
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