The forms and determinants of social exclusion in the European Union: the case of Luxemburg.

Abstract The paper investigates the social exclusion process in the European Union (EU), particularly in Luxemburg, addressing both conceptual and empirical issues. It examines aspects such as; the most appropriate definition of social exclusion for the case of Luxemburg, the way economic and social disadvantages cumulate within the social exclusion process, and the main determinants of social exclusion, income poverty and deprivation. To analyze the topics mentioned above, different econometric models have been applied.

Keywords Social exclusion * Deprivation * Economic and social disadvantages

JEL D60 * 050

Introduction

Social exclusion has been the subject of many conceptual and empirical studies recently, raising a lot of research questions, different approaches and, in many cases, different results, principally due to its relative nature (Paugam 1995; Moisio 2000; Tsakloglou 2002; Whelan et al. 2001). Although it is commonly agreed that social exclusion is a dynamic and multidimensional phenomenon, it is still debatable if the underlying process can be described as an accumulative process and what kind of economic or social disadvantages are accumulated. Given that social exclusion involves the accumulation of different symptoms of deprivation over time, it is suspected that different determinants are responsible for perceived social exclusion, at different times. The delimitation of the process' most powerful determinants may provide insights to the social policies aimed to reduce and prevent social exclusion.

The paper particularly analyzes social exclusion in Luxemburg, even though Luxemburg is one of the most developed European Union (EU) countries. As a relative and multidimensional phenomenon, social exclusion affects all countries. Although absolute poverty is not a matter of concern in Europe anymore, in the most recent decades, economic and social changes have created new forms of deprivation. Presently, social exclusion is a widespread phenomenon. According to the 2003-2006 reports on social inclusion in the EU member states, poverty and social exclusion continue to be serious challenges. Globalization and the EU enlargement process have increased the labor mobility across the EU. This phenomenon has sharpened inequality and generated social exclusion. In Luxemburg, the immigration, with the uniqueness of the labor market and the changing patterns of the contemporary society, (the increasing divorces rate, the women's status, particularly the situation of single women in society, etc.) has created vulnerable groups and generated social exclusion.

In the following section, at a conceptual level, social exclusion is examined with income poverty and deprivation, through their particularities and differences, in order to analyze the process leading to social exclusion at various stages. The third section describes the methodology used to create the latent variable of social exclusion. Following the line of research imposed by Paugam (1995), in the fourth section, in the case of Luxembourg, we want to check whether social exclusion has an accumulative nature or if it can be described as an accumulation of economic and social disadvantages. This exercise also allows us to determine the rank of each deprivation item in the social exclusion process. A unitary approach to income poverty, deprivation and social exclusion is offered in the fifth section, by calculating rates for each state of deprivation and for the non-poverty state. The sixth section presents the dynamic analysis of the determinants of income poverty and social exclusion. In the last section, the conclusions deal with the empirical findings for the Luxemburg case.