Social Exclusion and Convergence in the EU: An Assessment of the Europe 2020 Strategy

Juan Ángel Lafuente,Javier Ordóñez,Mercedes Monfort,Amparo Marco

doi:10.3390/su12051843

Abstract

Economic convergence has long been a declared objective of the EU and considered the fundamental mechanism for achieving socioeconomic cohesion. The recent economic crisis had an uneven impact across EU countries and brought a halt to the process of economic and social convergence. In response to this situation, the Europe 2020 strategy, launched in 2010, aimed to deliver social and territorial cohesion in the Member States. In this paper we evaluate the poverty and social exclusion pillar of the Europe 2020 strategy by analysing whether it has promoted convergence across the EU countries in the indicators devised to capture risk of poverty, severe material deprivation, and the number of persons living in households with very low work intensity. Our results for all three rates indicate that convergence occurs in heterogeneous clubs that do not follow a geographic east‒west or south‒north pattern. Convergence within each club, especially for the severe deprivation rate, takes place by means of a catching-up process, with Eastern European levels converging on the Western levels. Finally, not only is there club convergence, but there is no tendency for the clubs to convergence. Poverty and social cohesion indicators show a multi-speed Europe, casting doubt on the sustainability of the overall convergence process in the EU.

Highlights

Economic convergence is a real, long-term phenomenon directly related to growth processes, occurring when lower-income economies grow faster than higher-income economies so that the former catch up with the latter [1]
We evaluate the existence of clubs in poverty and social exclusion indicators by applying the methodology proposed by Phillips and Sul [10,11] which enables us to distinguish different paths of convergence among the various heterogeneous economies involved in a convergence process
The club convergence test developed by Phillips and Sul [10,11] is applied to the three indicators for poverty and social exclusion

Summary

Introduction

Economic convergence is a real, long-term phenomenon directly related to growth processes, occurring when lower-income economies grow faster than higher-income economies so that the former catch up with the latter [1]. Ordóñez et al [5] conclude that, after years of ever-closer economic integration, EMU countries have converged to different steady states in competitiveness, measured as real unit labour costs, and in capital accumulation and total factor productivity According to these authors, the fact that EMU countries have converged to different long-run equilibrium levels in terms of the growth drivers (capital accumulation and total factor productivity) points to the fact that the imbalances at the root of the euro crisis are related to the specificities of the growth model in the periphery and core European countries. According to Monfort et al [6], a lack of real economic convergence can be observed in income inequality and unemployment

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