Journal of Family and Economic Issues

, Volume 36, Issue 4, pp 531–556 | Cite as

Economic Hardship, Housing Cost Burden and Tenure Status: Evidence from EU-SILC

  • Manuela DeiddaEmail author
Original Paper


The primary goal of this study is to contribute on the literature on poverty by looking at household economic hardship in relation to the housing cost burden. Being one of the most significant outlays in a household balance, housing costs may indeed cause households to reduce non-housing expenditure such as health care, education, food, and clothing, thus creating serious household economic hardship. Using microdata from the European Union Statistics on Income and Living Conditions dataset (EU-SILC) regarding five European countries (Italy, Germany, UK, Spain, and France) we have examined the predictive power of housing costs in explaining family economic hardship. Furthermore, we have jointly estimated the effect of the housing cost burden upon economic hardship for renters versus home-owners paying mortgages. Results showed that housing costs represent a non negligible burden in all the five European countries. Moreover, home ownership was found to significantly reduce household hardship status.


Financial distress Household finance Housing cost burden Tenure status 

JEL Classification

D12 D14 C24 


  1. Alessie, R., Hochguertel, S., & Van Soest, A. (2002). Household portfolios in the Netherlands. In L. Guiso, M. Haliassos, & T. Jappelli (Eds.), Household portfolios (pp. 341–388). Cambridge: MIT Press.Google Scholar
  2. Amemiya, T. (1978). The estimation of a simultaneous equation generalized probit model. Econometrica Journal of the Econometric Society, 46(5), 1193–1205. doi: 10.2307/1911443.CrossRefGoogle Scholar
  3. Atkinson, A. B., Cantillon, B., Marlier, E., & Nolan, B. (2002). Social indicators. The EU and social inclusion. Oxford: Oxford University Press.CrossRefGoogle Scholar
  4. Ayala, L., Jurado, A., & Pérez-Mayo, J. (2011). Income poverty and multidimensional deprivation: Lessons from cross-regional analysis. Review of income and wealth, 57(1), 40–60. doi: 10.1111/j.1475-4991.2010.00393.x.CrossRefGoogle Scholar
  5. Banks, J., Blundell, R., Oldfield, Z., & Smith, J. P. (2004). House price volatility and housing ownership over the life cycle (UCL Discussion Papers in Economics 04–09). University College London: London, UK. Retrieved from
  6. Banks, J., Blundell, R., & Smith, J. P. (2003). Wealth portfolios in the US and the UK. In D. Wise (Ed.), Perspectives on the economics of ageing (pp. 205–246). Chicago: Chicago University Press.Google Scholar
  7. Bárcena-Martín, E., Lacomba, B., Moro-Egido, A. I., & Pérez-Moreno, S. (2013). Country differences in material deprivation in Europe. Review of Income and Wealth: Advance online publication. doi: 10.1111/roiw.12030.Google Scholar
  8. Bardone, L., & Guio, A.C. (2005). In-work poverty, in Eurostat (ed.), Statistics in Focus-Population and Social Conditions (publication no. 5/2005), Luxembourg, EUROSTAT. Retrieved from
  9. Benito, A., (2007) Housing equity as a buffer: evidence from UK households (Working paper no. 324). Retrieved from
  10. Boarini, R., & d’Ercole, M. M. (2006). Measures of material deprivation in OECD Countries (No. 37). OECD Publishing. doi: 10.1787/866767270205.
  11. Boeri T., & Brandolini A. (2005). The age of discontent: Italian households at the beginning of the decade, (IZA discussion paper No. 1530). Retrieved from
  12. Bosch, K. (1998). Poverty and assets in Belgium. Review of Income and Wealth, 44(2), 215–228. doi: 10.1111/j.1475-4991.1998.tb00269.x.CrossRefGoogle Scholar
  13. Bostic, R. W., & Lee, K. O. (2008). Mortgages, risk, and homeownership among low-and moderate-income families. The American Economic Review, 98(2), 310–314. doi: 10.1257/aer.98.2.310.CrossRefGoogle Scholar
  14. Brandolini, M., Coroneo, F., Giarda, E., & Moriconi, C., & See, S.G. (2013). Differences in perceptions of the housing cost burden among European countries (Nota di lavoro Prometeia 2010-01). Retrieved from Prometeia website:
  15. Cantillon, S., & Nolan, B. (1998). Are married women more deprived than their husbands? Journal of Social Policy, 27(02), 151–171. doi: 10.1017/s0047279498005261.CrossRefGoogle Scholar
  16. Charles, K.K., Hurst, E., & Roussanov, N.L. (2007). Conspicuous consumption and race, (NBER Working Paper No. W13392). Retrieved from NBER website:
  17. Childers, T.L., & Rao, A.R. (1992). The influence of familial and peer-based reference groups on consumer decisions. Journal of Consumer Research, 19(2), 198–211. Retrieved from
  18. Chiuri, M. C., & Jappelli, T. (2003). Financial market imperfections and home ownership: a comparative study. European Economic Review, 47(5), 857–875. doi: 10.1016/S0014-2921(02)00273-8.CrossRefGoogle Scholar
  19. Christelis, D., Jappelli, T., Paccagnella, O., & Weber, G. (2009). Income, wealth and financial fragility in Europe. Journal of European Social Policy, 19(4), 359–376. doi: 10.1177/1350506809341516.CrossRefGoogle Scholar
  20. Conley, D., & Gifford, B. (2006). Home ownership, social insurance, and the welfare state. In Sociological Forum, 21, 55–82. doi: 10.1007/s11206-006-9003-9.CrossRefGoogle Scholar
  21. European Foundation for the Improvement of Living and Working Conditions (EUROFUND) (2010) Working Poor in Europe. Retrieved from EUROFUND website:
  22. EUROSTAT (2002) European Social Statistics. Income, Poverty and Social Exclusion: 2nd Report, European Commission, Luxembourg. Retrieved from
  23. EUROSTAT, (2013) Handbook of residential property prices, 2013. Retrieved from
  24. Ferrer-i-Carbonell, A. (2005). Income and well-being: an empirical analysis of the comparison income effect. Journal of Public Economics, 89(5), 997–1019. doi: 10.1016/j.jpubeco.2004.06.003.CrossRefGoogle Scholar
  25. Figari, F. (2012). Cross-national differences in determinants of multiple deprivation in Europe. The Journal of Economic Inequality, 10(3), 397–418. doi: 10.1007/s10888-010-9157-9.CrossRefGoogle Scholar
  26. Fusco A., (2012) The relationship between income and housing deprivation in Luxembourg: a longitudinal analysis (Working Paper Series 2012-10). Retrieved from CEPS/INSTEAD website:
  27. Georgarakos, D., Lojschova, A., & Ward-Warmedinger, M. (2010). Mortgage Indebtedness and Household Financial Distress. Working Paper series No. 1156, European Central Bank.Google Scholar
  28. Goodman, A. C. (1990). Demographics of individual housing demand. Regional Science and Urban Economics, 20(1), 83–102. doi: 10.1016/0166-0462(90)90026-Y.CrossRefGoogle Scholar
  29. Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica, 47, 153–162. Retrieved from Scholar
  30. Heflin, C., Sandberg, J., & Rafail, P. (2009). Structure of material hardship in US households: An examination of the coherence behind common measures of well-being. Social Problems, 56(4), 746–764. doi: 10.1525/sp.2009.56.4.746.CrossRefGoogle Scholar
  31. Hong, H., Kubik, J. D., & Stein, J. C. (2004). Social interaction and stock market participation. Journal of Finance, 59(1), 137–163. doi: 10.1111/j.1540-6261.2004.00629.x.CrossRefGoogle Scholar
  32. Huang, J., Nam, Y., & Lee, E. J. (2014). Financial capability and economic hardship among low-income older asian immigrants in a supported employment program. Journal of Family and Economic Issues. doi: 10.1007/s10834-014-9398-z.Google Scholar
  33. Kessler, D., & Wolff, E. N. (1991). A comparative analysis of household wealth patterns in France and the United States. Review of Income and Wealth, 37(3), 249–266. doi: 10.1111/j.1475-4991.1991.tb00370.x.CrossRefGoogle Scholar
  34. Kurz, K., & Blossfeld, H. P. (2004). Home ownership and social inequality in comparative perspective. Stanford: Stanford University Press.Google Scholar
  35. Kutty, N. K. (2005). A new measure of housing affordability: Estimates and analytical results. Housing Policy Debate, 16(1), 113–142. doi: 10.1080/10511482.2005.9521536.CrossRefGoogle Scholar
  36. Labeaga, J.M., Molina J.A., & Navarro M. (2007) Income satisfaction and deprivation in Spain (IZA Discussion Paper no.2702). Retrieved from IZA website:
  37. Layte, R., Nolan, B., & Whelan, C.T. (2001). Reassessing income and deprivation approaches to the measurement of poverty in the Republic of Ireland. Economic and Social Review, 32(3), 239–262. Retrieved from
  38. Leonard, T., & Di, W. (2014). Is household wealth sustainable? An examination of asset poverty reentry after an exit. Journal of Family and Economic Issues, 35(2), 131–144. doi: 10.1007/s10834-013-9357-0.CrossRefGoogle Scholar
  39. Maclennan, D., Muellbauer, J., & Stephens, M. (1998). Asymmetries in housing and financial market institutions and EMU. Oxford Review of Economic Policy, 14(3), 54–80. doi: 10.1093/oxrep/14.3.54.CrossRefGoogle Scholar
  40. Maddala, G. (1996). Limited-dependent and qualitative variables in econometrics. Cambridge: Cambridge University Press.Google Scholar
  41. Mammen, S., Dolan, E., & Seiling, S.B. (2014). Explaining the poverty dynamics of rural families using an economic well-being continuum. Journal of Family and Economic Issues. Advance online publication. doi: 10.1007/s10834-014-9405-4.
  42. Marx, I., & Verbist, G. (1998). Low-paid work and poverty: a cross-country perspective. In S. Bazen (Ed.), Low-wage employment in Europe (pp. 63–86). Cheltenham: Edward Elgar.Google Scholar
  43. Mayer, S. E., & Jencks, C. (1989). Poverty and the distribution of material hardship. Journal of Human Resources, 24(1), 88–114. doi: 10.2307/145934.CrossRefGoogle Scholar
  44. Melzer, B. T. (2011). The real costs of credit access: Evidence from the payday lending market. The Quarterly Journal of Economics, 126(1), 517–555. doi: 10.1093/qje/qjq009.CrossRefGoogle Scholar
  45. Mimura, Y. (2008). Housing cost burden, poverty status, and economic hardship among low-income families. Journal of Family and Economic Issues, 29(1), 152–165. doi: 10.1007/s10834-007-9085-4.CrossRefGoogle Scholar
  46. Miranda, A., & Rabe-Hesketh, S. (2006). Maximum likelihood estimation of endogenous switching and sample selection models for binary, ordinal, and count variables. Stata Journal6(3), 285–308. Retrieved from
  47. Nolan, B., & Whelan, C. T. (2010). Using non-monetary deprivation indicators to analyse poverty and social exclusion in rich countries: Lessons from Europe? Journal of Policy Analysis and Management, 29, 305–323. doi: 10.1002/pam.20493.CrossRefGoogle Scholar
  48. Nolan, B., & Whelan, C. T. (2011). Poverty and deprivation in Europe, OUP Catalogue. Oxford: Oxford University Press.CrossRefGoogle Scholar
  49. Peña-Casas R., & Latta M. (2004). Working poor in the European Union, European Foundation for the Improvement of Living and Working Conditions, Dublin. Retrieved from
  50. Pittini, A., & Laino, E. (2011). Housing Europe review: The nuts and bolts of European social housing systems, CECODHAS Housing Europe’s Observatory, Brussels. Retrieved from
  51. Prawitz, A. D., Kalkowski, J. C., & Cohart, J. (2013). Responses to economic pressure by low-income families: Financial distress and hopefulness. Journal of Family and Economic Issues, 34(1), 29–40. doi: 10.1007/s10834-012-9288-1.CrossRefGoogle Scholar
  52. Schafer, J. L. (1999). Multiple imputation: a primer. Statistical Methods in Medical Research, 8(1), 3–15. doi: 10.1177/096228029900800102.CrossRefGoogle Scholar
  53. Schafer, J. L., & Graham, J. W. (2002). Missing data: our view of the state of the art. Psychological Methods, 7(2), 147–177. doi: 10.1037//1082-989X.7.2.147.CrossRefGoogle Scholar
  54. Stone, M. E. (2006). What is housing affordability? The case for the residual income approach. Housing Policy Debate, 17(1), 151–184. doi: 10.1080/10511482.2006.9521564.CrossRefGoogle Scholar
  55. Sullivan, J. X., Turner, L., & Danziger, S. (2008). The relationship between income and material hardship. Journal of Policy Analysis and Management, 27(1), 63–81. doi: 10.1002/pam.20307.CrossRefGoogle Scholar
  56. Townsend, P. (1979). Poverty in the United Kingdom. Harmondsworth: Penguin.Google Scholar
  57. US Department of Housing and Urban Development, Office of Policy Development and Research (2007). Affordable housing needs 2005: Report to Congress. Washington, DC: Government Printing Office. Retrieved from
  58. Valentino, S. W., Moore, J. E., Cleveland, M. J., Greenberg, M. T., & Tan, X. (2014). Profiles of financial stress over time using subgroup analysis. Journal of Family and Economic Issues, 35(1), 51–64. doi: 10.1007/s10834-012-9345-9.CrossRefGoogle Scholar
  59. Van Dam, R., Geurts, V., & Pannecoucke, I. (2003). Housing tenure, housing costs and poverty in Flanders (Belgium). Journal of Housing and the Built Environment, 18(1), 1–23. doi: 10.1023/A:1022429825185.CrossRefGoogle Scholar
  60. Venti, S. F., & Wise, D. A. (2004). Aging and housing equity: another look. Wealth portfolios in the US and the UK. In D. Wise (Ed.), Perspectives on the economics of ageing (pp. 127–175). Chicago: Chicago University Press.CrossRefGoogle Scholar
  61. Watson, D., & Webb, R. (2009). Do Europeans view their homes as castles? Homeownership and poverty perception throughout Europe. Urban Studies, 46(9), 1787–1805. doi: 10.1177/0042098009106020.CrossRefGoogle Scholar
  62. Wolff, E. N. (1994). Trends in household wealth in the United States, 1962–83 and 1983–89. Review of Income and Wealth, 40(2), 143–174. doi: 10.1111/j.1475-4991.1994.tb00056.x.CrossRefGoogle Scholar
  63. Yates, J., & Bradbury, B. (2010). Home ownership as a (crumbling) fourth pillar of social insurance in Australia. Journal of Housing and the Built Environment, 25(2), 193–211. doi: 10.1007/s10901-010-9187-4.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Dipartimento di Scienze economiche e aziendaliUniversità di CagliariCagliariItaly

Personalised recommendations