In‐Work Poverty Transitions Dynamics: The Role of Active Labour Market Policies Across European Nations Using EU ‐ SILC

ABSTRACT

This paper investigates the relationship between Active Labour Market Policies (ALMPs) and in‐work poverty (IWP) transitions in Europe. Using EU‐SILC longitudinal data (2017–2020) for 24 countries, combined with Eurostat data on social policy investment, we estimate effects of six ALMP subtypes and for different subsamples (male‐ and female‐headed households) providing new, policy‐relevant insights. This study examines: (1) differences among European countries regarding IWP incidence and transitions, (2) comparative between‐country differences on how national investment in ALMPs relates to IWP and (3) how different ALMP typologies and expenditure influence the probability of transitioning out of IWP in a multilevel approach. Results indicate that higher ALMP spending is generally associated with lower IWP incidence and more frequent transitions. The findings reveal notable cross‐country differences and gendered results, and results from multilevel logistic regressions show that greater investment in direct job creation and labour market services is linked to higher exit rates from IWP, suggesting that these policies facilitate poverty exits. In contrast, supported employment appears to be associated with lower transition rates. Different effects are also observed between male‐ and female‐headed households, as significant impacts are only found for the latter, more precisely in direct job creation policies and labour market services. Supported employment and training programs are associated with a negative effect on transitions out of in‐work poverty for women‐led households. These findings underscore the importance of targeted policy interventions that address the structural conditions that sustain in‐work poverty, offering insights into the effectiveness of ALMPs as a tool for economic mobility.