Determinants of Individual Income in EU Countries: Implications for Social Policy Targeting

Abstract

The introduction of the Income Index constructed by authors as well as the identification of demographic, socio-economic and occupation-related factors influencing the income of individuals in EU countries is the main contribution of the paper. The Income Index makes it possible to analyze data of individuals from all EU countries. Results of a multiple hierarchical regression of EU-SILC microdata provide the factors that influence individuals' income. Thus, they show through which factors can be intervened in social policy settings to reduce income inequality. The findings confirm the specific position of single parent households in the labor market and their need for social support. Other factors significantly affecting the Income Index are the occupation sector (typically agriculture and accommodation and services are related to low incomes) and the degree of urbanization (rural areas with the lowest incomes of individuals).