Multidimensional welfare comparisons of EU member states before, during, and after the financial crisis: a dominance approach

Abstract

How did the EU states’ populations fare during the financial crisis in key dimensions such as income, health, and education? We seek to answer this question by way of welfare comparisons between countries and within countries over time, using EU-SILC data. Our study is novel in implementing a multidimensional first order dominance (FOD) comparison approach on the basis of multi-level indicators. FOD only requires that outcomes can be ranked from worse to better within each dimension and is therefore suitable for the analysis of multidimensional ordinal data. We find that the countries most often dominated are southern and eastern European member states, and the dominant countries are mostly northern and western European member states. However, for most country comparisons, there is no dominance relationship. Moreover, only a few member states have experienced a temporal dominance improvement in welfare, while no member states have experienced a temporal dominance deterioration during the financial crisis.