Measurement of housing expenditure for homeowners and tenants, and measurement of childcare costs

This report investigates income definitions and methods for measuring poverty. More specifically, the aim is to develop supplementary poverty measures based on alternative income definitions. Thus, income is defined exclusive of housing costs, interest costs and childcare expenses. The corresponding income measures reflect the amount of income that is disposable for household consumption after housing costs and/or childcare expenses are subtracted.

The components included in housing costs are different for homeowners and tenants. We employ data from the Norwegian Rental Market Survey to estimate models for rental payments by tenant households. The EU Statistics on Income and Living Conditions (EU-SILC) survey is used to analyze annual maintenance costs for homeowners. For measuring household childcare expenses, we employ tax reported data on parental deduction for childcare costs.

We construct several alternative income measures in which housing costs, interest payments, and childcare expenses are subtracted. We find that the proportion of tenants and homeowners exposed to persistent income poverty is rather sensitive to alternative income definitions. To some extent, the results are also sensitive to the specification of models for analyzing housing costs of tenants and homeowners, respectively.