In-work poverty in the EU—seeing the bigger picture

Abstract Research examining micro-level factors in European countries is well-established. However, little research explores how macro-level factors, such as institutional settings or labour market structures, shape working poverty. After reviewing the literature on macro-level determinants of in-work poverty, we classified these factors into two broad categories—institutional and structural—and examined their impact on in-work poverty rates across the EU. We conducted a panel regression analysis using data from 27-EU countries over the period 2009–2022. The results indicate that in-work poverty in the EU-27 is shaped by both institutional and structural macro-level factors. Fluctuations in the employment rates of specific population groups influence working poverty. The in-work poverty rate declines as youth employment rates increase, whereas higher employment rates among non-EU nationals, low-skilled individuals, and those employed in agriculture, forestry, and fishing are associated with an increase in in-work poverty in the EU. The part-time employment rate was found to be a contributing factor to the increase in in-work poverty. A larger share of the population leaving education early contributes to rising in-work poverty. Finally, our findings highlight that public expenditure on disability benefits has a positive effect on alleviating in-work poverty by providing crucial financial support to vulnerable households.