Rich, Average And Poor Regions In The Czech And Slovak Republic - Model Based Clustering

Abstract

One way to analyse the actual state of economics can be done by quantitative illustration of the financial power of households. The current economical crisis has the greatest negative impact on the poorest households below the poverty threshold. Therefore, this paper focuses on quantification of the financial situation of households in individual regions in correlation with the poverty threshold. It contains description of methods used and results of their application with respect to evaluation of spatial distribution of poverty of population on the regional level in the Czech Republic and Slovakia. The methodology is based on finite mixtures of regression models that belong to methods called Model Based Clustering. It concerns special methods of clustering of objects that are based on probability models. The criterion for clustering of regions is the level of risk of poverty rate of households. The regions are divided into three clusters (components) - "rich", "middle", and "poor". The households are scored according to the level of national poverty threshold, in our case according to the level 60% of median of the national equivalised disposable household income. The results of the statistical survey EU SILC (European Union - Statistics on Income and Living Conditions) made by the Czech Statistical Office and the Statistical Office of the Slovak Republic in year 2005 through 2009 form the data base. All calculations have been made in the freeware programming environment R, which is accessible on the internet (http://cran.r-project.org/). For the purpose of modelling of the poverty rate of households using the regression clusters, the upgrade package flexmix was used.