Convergence: Socioeconomic factors

10 Prosinec 2018

While economic convergence (usually measured as convergence in GDP per capita) has attracted significant academic attention, studies on institutional and social convergence within the EU from a wider perspective are relatively scarce. Eurofound has aimed to fill this gap by taking into consideration 12 indicators from four dimensions: macroeconomic, social protection, access to services and gender equality.

The empirical evidence shows that European Member States are converging towards better socioeconomic conditions, notwithstanding the negative effects of the crisis. Macroeconomic indicators show a catching-up process of new Member States towards the richest western European countries in the GDP per capita and disposable household incomes.

In spite of the positive trends registered in some economic indicators, others measuring the extent of inequalities among the population show deterioration and the interruption of the upward convergence process, since the onset of the crisis. The findings indicate that particular attention should be placed not only on reducing disparities among countries but also on reducing inequalities among the population.

Main findings

The results of the analysis show strong upward convergence in most of the indicators for the period considered. Real GDP per capita has increased steadily since 1995 at European level. For this variable, a strong convergence trend is evident when the relative increase of Member States is measured. Indicators measuring access to services, such as education, healthcare and childcare, show consistent upward movement. Upward divergence was found for self-reported unmet medical needs; a decrease in the number of people whose medical needs went unmet was accompanied by an increase in the heterogeneity of Member States. Finally, upward convergence is apparent for all the gender equality variables. In particular, there were strong upward convergence trends in the gender gap in employment, as well as in early school-leavers and in parliamentary representation.

 

Featured inidicator: disposable household income

Disposable household income is measured as the balance of primary income and the redistribution of income in cash (social contributions paid, social benefits in cash received, current taxes on income and wealth paid, as well as other current transfers), based on final consumption and expressed in purchasing power standards (PPS). Data for this indicator for all 28 Member States are available for a restricted period: 2005–2015. During this period, there was upward convergence in this indicator: on average, disposable income increased from 11,900 to 14,600 PPS and the variability of Member States decreased.

Dimensions and indicators

Macroeconomic

Macroeconomic convergence is measured through one indicator: real GDP per capita. This is a measurement of the total economic output of a country divided by the number of people and adjusted for inflation. It is used to compare the standard of living between countries and over time. In order to compare this value across countries, real GDP per capita is adjusted by purchasing power parity (PPP).

Social protection

Convergence in social protection is investigated through three indicators: expenditure on social protection, the impact of social transfers on poverty reduction, and the aggregate replacement ratio for pensions. All three are included in the Social Scoreboard.

Access to services

The dimension of access to services is measured through four indicators: early school-leavers rate, tertiary education attainment rate, self-reported unmet needs for medical care, and children aged less than three years in formal childcare. All these indicators are included in the Social Scoreboard.

Gender equality

The gender equality dimension measures the difference between men and women, or the gender gap, in four indicators: employment, parliamentary representation, early school-leavers and AROPE.

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