Association for Public Policy Analysis & Management

With income inequality increasing and children exposed to higher risks of poverty and material deprivation than the population as a whole in the majority of European countries, there is a concern that income inequality among children has worsened over the crisis. This paper present results on the levels of bottom-end inequality in children’s incomes in 31 European countries in 2013 and trace the evolution of this measure since 2008. The relative income gap is measured as a difference between the median and the 10th percentile, expressed as a percentage of the median. In 2013 it ranges from 37% in Norway to 67% in Romania. The relative income gap worsened in 20 out of the 31 European countries between 2008 and 2013. Unequal growth rate in child income across the distribution is a factor contributing to the increase in bottom-end child income inequality. Between 2008-2013 only three countries - Czech Republic, Finland, and Switzerland - have managed to decrease the relative income gap between the average and the poorest children as a result of the income of poor children rising more than the income of a child at the median. Social transfers play a positive role in reducing income differentials, as post-transfer income gaps are higher than the ones before transfers, especially in countries like Ireland and the United Kingdom. Countries with greater bottom-end income inequality among children have lower child well-being, higher levels of child poverty and material deprivation. They also have higher income inequality overall, as measured by the Gini coefficient.