Income Inequality Among Children in Europe 2008–2013

With income inequality increasing and children exposed to higher risks of poverty and material deprivation than the population as a whole in the majority of European countries, there is a concern that income inequality among children has worsened over the financial crisis. This paper presents results on the levels of bottom-end inequality in children’s incomes in 31 European countries in 2013 and traces the evolution of this measure since 2008. The relative income gap is measured as the difference between the median and the 10th percentile, expressed as a percentage of the median. In 2013 it ranged from 37% in Norway to 67% in Romania. The relative income gap worsened in 20 of the 31 European countries between 2008 and 2013. The unequal growth rate in child income across the distribution is a factor contributing to the increase in bottom-end child income inequality. Between 2008 and 2013 only three countries – the Czech Republic, Finland, and Switzerland – have managed to decrease the relative income gap between the average and the poorest children as a result of the income of poor children rising faster in real terms than the income of a child at the median. Social transfers play a positive role in reducing income differentials, as post-transfer income gaps are smaller than those before transfers, especially in countries like Ireland and the United Kingdom. Countries with greater bottom-end income inequality among children have lower levels of child well-being, and higher levels of child poverty and material deprivation. They also have higher income inequality overall, as measured by the Gini coefficient.