Search for a command to run...
The existence of a common monetary poverty line set at 60% of the national median income, used by most OECD countries, is very useful for comparisons over time and across countries. However, this measure is primarily a convention, and thus the 60% level might be questioned in terms of targeting public policies, as it does not necessarily reflect who is poor in a given society. In this study, I attempt to establish a meaningful poverty threshold at the national level by combining the objective approach in terms of income with a subjective approach in four comparable countries—France, Australia, Germany, and the United Kingdom— using detailed panel administrative data. More precisely, I compare household income trajectories with the evolution of individuals’ well-being to identify empirical discontinuities in well-being dynamics following income shocks at the bottom of the income distribution. These discontinuities define a vulnerability zone where individuals are more impacted by transitioning below 80% of the median income in France and Australia, and 70% of the median income in Germany and the United Kingdom, than at any alternative monetary threshold. I then highlight the role of life and labor market events that occur simultaneously with households’ income shocks, as well as the differences in institutional regimes that could explain the location of these empirical discontinuities in each country. Overall, my study suggests broadening the usual monetary poverty definition by considering alternative thresholds more closely aligned with individuals’ perceptions of their situations.