Measuring Economic Insecurity Using a Counting Approach. An Application to Three EU Countries

Abstract

In this paper, we propose the use of a multidimensional approach to the measurement of economic insecurity in three European countries. We combine six different unidimensional indicators proxying the subjective and objective determinants of economic insecurity into a single index based on a counting approach method, which allows us to measure the incidence and the intensity of the phenomenon. Using longitudinal data from the European Union Statistics on Income and Living Conditions (EU‐SILC) from 2008 to 2016, we find that the incidence of insecurity falls as income grows, being significantly present in middle‐income households both in Spain and France but not in Sweden. Interestingly, in all three countries, the contribution of different dimensions to insecurity changes as household income grows, while for all income levels a higher education and being employed in a non‐fixed term contract are strongly related to a lower probability of being economically insecure.