The evolution of income distribution and disability in Europe

We investigate how disability affects income distribution and how this has evolved in Europe, using 2005–2008 and 2015–2018 European Union Statistics for Income and Living Conditions data. We model both income and disability processes in a dynamic way, allowing for the possible role of past income in determining disability. Our findings suggest the decade explored has been characterized by a slight strengthening of income polarization and lower income mobility. However, income inequality evolved differently by disability group: it increased for non-disabled, and decreased for people with severe disabilities and their households. For this latter, our results suggest this evolution can be explained by a worsening of overall income conditions, with greater persistence in poverty, lower persistence in richness, and a higher probability of moving from high to low-income positions. In this respect, increasing social expenditure for disability may be important for the mitigation of such detrimental effects.