Education, Labour Market Status and Household Income Dynamics in Romania

During the last decade Romania experienced considerable economic and social instability and household income has been subject to changes both in level and structure, though not equally for all households. It seems that low income households are more exposed to the risk of losing parts of their income during economic downturn, but also middle or high income households may be affected. Household characteristics, such as education and labour market status, are amongst the main determinants of household income level and can be associated with income dynamics. This paper aims at studying the role played by education and labour market status in the dynamics of household income in Romania in the period between 2007 and 2010. Our approach is twofold; we study the distribution and the income mobility patterns over time between income classes, paying attention to education and labour market status of household members. We attempt to analyse the extent to which education and labour market status count for the evolution of household income. A special focus has been on low income households. We base our analysis on EU-SILC data and we employ growth incidence curve analysis and transition matrices to determine the movement of households along the income distribution. Our results show that income dynamics is strongly related to education, as almost two thirds of the low income households are poorly educated and remain trapped in the same relative position on the income distribution over the years. Precarious labour market attachment as well is a drawback in income mobility. (C) 2016 Published by Future Academy www.FutureAcademy.org.uk