SILC survey, resulting in a high, albeit imperfect, degree of comparability across countries. Each Member State’s household survey contains modules for income, labor market activity, demographics, education, health, housing, social programs, access to some durable consumption goods, and subjective welfare. The EU-SILC contains the following sources of individual’s income: (i) cash or near-cash personal income; (ii) non-cash employee income and employer’s social insurance contribution; and (iii) cash benefits (including unemployment, old age, survivor, sickness, disability, and education-related benefits). The EU-SILC also contains the following sources of household income: income from property rental, housing allowances, regular inter-household transfers, interest, dividends, profit from capital investments in unincorporated businesses, and income received by household members aged less than 16 years.<sup>7</sup> The household income data pertains to the preceding year.

# **_Poverty and social exclusion indicators_**

The four outcome indicators of poverty and social exclusion considered in this paper are: at-risk-ofpoverty rates, severe material deprivation, low work intensity, and anchored poverty. A brief explanation of each indicator follows.

The _at-risk-of-poverty rate_ is the percentage of the population with an equivalized disposable income (after all social transfers) of less than 60 percent of the national median equivalized disposable income (after all social transfers). The equivalized disposable income is achieved by dividing total household disposable income by the number of equivalent adults in the household, using the modified OECD scale.<sup>8</sup> _Severely materially deprived_ households are those that state they cannot afford at least four of the following nine items: (i) mortgage payments, rent, or utility bills; (ii) adequate heating; (iii) unexpected expenses; (iv) meat, fish, or a protein equivalent every second day; (v) a week-long holiday away from home; (vi) a car; (vii) a washing machine; (viii) a color television set; or (ix) a telephone. The indicator thus attempts to capture a household’s economic capacity, albeit subjective, to acquire basic material goods and services regardless of whether or not they actually acquire them.<sup>9</sup> Severe material deprivation is, therefore, interpreted as the enforced inability (rather than the choice not to do so) to possess the goods and services and/or engage in activities that are socially perceived as basic necessities in the European context.

_Low work intensity_ is a measure of the share of the population living in households in which adult household members (aged 18–59) worked less than 20 percent of their total potential working time during the past year. The indicator is computed using individual-level information on months of

> 7 Although in most cases net income was available, in the Czech Republic, Hungary, Lithuania, and Slovakia only gross income was available.  For these four countries, we converted gross income into net income.

> 8 The modified OECD scale gives a weight of 1.0 to the first adult; 0.5 to the second and each subsequent person aged 14 and over; 0.3 to each child aged under 14, and then adds these up to arrive at the equivalized household size.

> 9 This takes into consideration that households may have the economic resources to afford certain goods and services but choose not to acquire them, which is distinct from commonly used asset indexes that focus solely on human and physical capital actually held by the household.