Modelling Multidimensional Poverty and Social Exclusion in the EU and Türkiye: Evidence from SDG 1 Indicators

Poverty and social exclusion remain major challenges to social sustainability, social cohesion and quality of life in Europe, and their reduction is a central objective of Sustainable Development Goal (SDG) 1. The present study examines the relationship between macroeconomic factors and poverty and social exclusion across the EU-27 and Türkiye. The analysis employs the EU’s headline at-risk-of-poverty-or-social-exclusion (AROPE) indicator and its three components: relative income poverty (AROP), severe material and social deprivation (SMSD), and very low work intensity (VLWI). Whilst the majority of cross-country studies utilise the composite rate or a single component and exclude Türkiye, this study estimates the comparative sensitivity of all three components to the same regressors within a panel that treats Türkiye as a structurally distinct case. Utilizing two-way fixed-effects models with country-clustered standard errors across 28 countries from 2015 to 2024, in conjunction with a range of robust checks, our study identifies three salient findings. First, Gross Domestic Product (GDP) per capita is the sole factor with a robust association with the headline rate. In particular, a 10% increase in GDP per capita is associated with a reduction in the AROPE rate of approximately 1.7 percentage points (an approximate semi-elasticity). Conversely, inequality and employment emerge as significant factors only under classical inference. Secondly, the associations demonstrated in this study are dimension-specific. Income is associated with material deprivation, inequality with relative income poverty, labour market conditions with work intensity, and social spending with material deprivation. Thirdly, the exclusion of Türkiye results in the reversal of the signs of the inflation and early-school-leaving coefficients, indicating a poverty dynamic that is structurally distinct. The analysis suggests that strengthening social sustainability requires not only economic growth, but also inclusive labour markets, effective social protection and reduced inequality.