At the cliff’s edge: An estimation of asset-based poverty rates for European regions

The ability of households to withstand and recover from economic crises depends not only on their income but also – crucially – on wealth. Liquid assets safeguard consumption when income shocks occur. When a large share of households in a region lacks sufficient liquid assets, that territory becomes more vulnerable to shocks, undermining regional resilience. However, most regional poverty indicators remain income-based and overlook the role of wealth. This may lead to an incomplete understanding of household fragility: middle-income regions may hide fragile households, while some low-income areas may show temporary resilience thanks to liquidity. Despite this relevance, regional evidence on asset-based vulnerability is limited due to the scarcity of harmonised data at this geographical scale. This article proposes and applies a method of estimating the liquid asset poverty (LAP) indicator, defined as the share of households whose liquid assets are insufficient to cover three months of average expenditure. To generate comparable regional estimates, we construct a homogeneous framework based on Generalised Cross-Entropy (GCE) methods that integrate microdata from the Household Finance and Consumption Survey (HFCS) and the EU Statistics on Income and Living Conditions (EU-SILC), ensuring internal consistency across datasets. The LAP indicator produced at regional scale provides policymakers with an operational tool to identify regions particularly exposed to the economic and social consequences of crises. By uncovering structural vulnerabilities that remain hidden in income-based poverty metrics alone, LAP supports more accurate territorial diagnostics and contributes to the design of long-term, regionally targeted resilience and mitigation strategies.