Energy deprivation dynamics and regulatory reforms in Europe: Evidence from household panel data

The typical ingredients of energy reforms in the European Union (EU) in the 1990s were full or partial privatization, vertical disintegration and liberalization. This paper analyses the effects of energy reforms on the probability of households experiencing deprivation, defined as difficulty in paying the bills. We use two sets of micro-data. First, the European Community Household Panel (ECHP), a large EU survey, offers evidence on people who report having been unable to pay scheduled utility bills. We consider seven European countries: Denmark, Belgium, France, Ireland, Italy, the Netherlands and Spain, and eight ECHP waves (1994–2001), with around 28,000 observations. Second, we also use micro-data from the European Statistics on Income and Living Conditions survey (EU-SILC) 2004–2005, with around 84,000 observations. The countries included are Belgium, France, Ireland, Italy, Spain, Austria, Finland, Luxembourg, Norway and Sweden. As indicators of regulatory reforms in the same countries and years we use ECTR (formerly REGREF), a database provided by the OECD. In both samples we find evidence that privatization increases the probability of households experiencing deprivation. Vertical disintegration has a similar effect and also increases the persistence in the status of household deprivation. Liberalization has no statistically significant effect. We discuss possible interpretations of these findings.