Income poverty rates measure the share of people at the bottom end of the income distribution. Society’s equity concerns are typically greater for the relatively disadvantaged. As a result, poverty measures often receive more attention than income inequality measures, with greater concerns for certain groups like older people and children, who have no or limited options for working their way out of poverty.
The average OECD relative poverty rate (i.e. the share of people living with less than half the median disposable income in their country) was 11.7% in 2016 for the OECD ( 6.4). Poverty rates were highest in Israel and the United States at almost 18%, while poverty in Denmark and Finland affected only 5-6% of the population. Mediterranean countries, South American countries and Baltic countries have relatively high poverty rates. Emerging economies also have higher levels of poverty than most OECD countries, particularly China and South Africa.
Relative poverty rates vary by gender. The average poverty rate for women equals 12.3% and 10.9% for men. Women face a higher risk of poverty than men in all OECD countries and key partners, except in Denmark, Finland and Greece. The largest gender poverty gaps are observed in Estonia, Latvia and Korea, where the poverty rates among women are 4 to 6 percentage points higher than men.
Changes in relative income poverty have been limited over the last decade. Between 2007 and 2016, only in Hungary and Lithuania poverty rose by more than 3 percentage points (Bars in 6.5). Over the same period, it fell in Australia and Finland, while changes were below 2 percentage points in the other OECD countries. By using an indicator which measures poverty against a benchmark “anchored” to half the median real incomes observed in 2005 (i.e. keeping constant the value of the 2005 poverty line), recent increases in income poverty are much higher than suggested by “relative” income poverty. This variation is particularly pertinent in Greece and Spain (“symbols” in 6.5). While relative poverty did not increase much or even fell in these countries, “anchored” poverty increased by 5 percentage points or more between 2007 and 2016, reflecting disposable income losses of poorer households in those countries. Only in Chile “anchored” poverty fell by more than 7 percentage points reflecting significant income gains of poorer households.
Relative poverty rates also vary by age group. On average across OECD countries, poverty is lower among adults at 10%, while it is higher at 13% for children and almost 14% for youth and elderly. Child poverty is low in Nordic countries but highest in Chile, Israel, Spain, Turkey and the United States, where more than one in five children is income-poor. Poverty rates amongst youth were particularly high in Denmark and Norway, countries where youth leave parent’s home early and become economically independent. But rates were also high in Spain where youth unemployment rates ballooned during the crisis years. Very high poverty rates among elderly are observed in a few countries, often related to maturation of pension systems. For instance, old-age poverty rates were highest in Korea, where the recent pension system has not fully matured. In Australia and Switzerland, old-age poverty rates are partly related to the fact that many pensioners have taken their accumulated pensions as lump sums (which are not counted as current income) rather than annuitising them to provide income streams. In Estonia, Latvia and Mexico, the level of safety net benefits for elderly is very low.
