Poverty trends during two recessions and two recoveries: lessons from Sweden 1991–2013

Jan O. Jonsson,Carina Mood,Erik Bihagen

doi:10.1186/s40174-016-0051-8

Jan O. Jonsson, Carina Mood + Show 1 more

Open Access

https://doi.org/10.1186/s40174-016-0051-8

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Abstract

We study cross-sectional and long-term poverty in Sweden over a period spanning two recessions, and discuss changes in the policy context. We find large increases in absolute poverty and deprivation during the 1990’s recession but much smaller increases in 2008-2010. While increases in non-employment contributed to increasing poverty in the 1990’s, the temporary poverty increase 2008-2010 was entirely due to growing poverty among non-employed. Relative poverty has increased with little variation across business cycles. Outflow from poverty and long-term poverty respond quickly to macro-economic recovery, but around one percent of the working-aged are quite resistant to such improvements.

Highlights

The internationally severe recession starting in 2008–2009 has spawned research on the consequences in terms of poverty and inequality (e.g. De Beer 2012; Smeeding et al 2011; Jenkins et al 2012)
11 Conclusions We study the long-term development of poverty following the deep recession in Sweden at the beginning of the 1990s, and find increasing poverty rates—though with some time lag, probably dependent on the social welfare and unemployment protection systems—from 5 to 11 % in 5 years’ time (1991–1996)
These rates fell back to 5 % when the economy improved again (1996–2007). These trends are robust to the choice of “breadline” poverty indicators. It goes for income poverty and for social assistance and economic deprivation; and it is true for inflow into poverty and outflow from it, as well as for short-term and long-term poverty

Summary

Introduction

The internationally severe recession starting in 2008–2009 has spawned research on the consequences in terms of poverty and inequality (e.g. De Beer 2012; Smeeding et al 2011; Jenkins et al 2012). There is a visible upturn in absolute poverty rates (both defined as below the poverty line and below 75 % of it), peaking in 2009–2010, but gradually falling to pre-recession (2007) levels in 2013 We complement these curves with EU-SILC data from 2008–2013 showing material deprivation and economic hardship. This group grew from around 13 % in 1991 to around 20 % in 1997, but has since shrunk noticeably, representing less than 6 % of the population in 2007—the increase was hardly visible for the most recent recession. The increase in poverty was much smaller (1.6 percentage points), and there was no increase in non-employment from 2006 to 2010: the non-employment dropped only very briefly for around a year in 2008 and

Change in absolute poverty

Findings

11 Conclusions