A new approach for measuring poverty or social exclusion reduction in European NUTS 2 regions

This paper examines the problem of poverty reduction for NUTS 2 regions in the European Union. To do so, we extend the concept of absolute poverty convergence to conditional poverty β-convergence and use a quantile regression approach to provide a broader assessment of the heterogeneous relationships between poverty and some economic factors. We consider spatial dependence between neighbouring regions using appropriate spatial econometric specification. We focus on regional performance in tackling poverty using a novel indicator based on the efficiency theory and examine potential heterogeneity in regions’ ability to fight poverty. These differences are analysed in detail considering instabilities in the relationship between regional performances and a relevant asset for policy effectiveness as the quality of institutions. Our findings can help policy makers to better understand factors behind poverty reductions and develop more responsive policies at different institutional levels.