Determinants of child poverty and policy responses in the European Union

András GábosTÁRKI Social Research Institute

8th ESPAnet Conference 2010

Social Policy and the Global Crisis: Consequences and ResponsesStream 2 Poverty and Social Exclusion

Budapest, 2-4 September 2010

The „Study on child poverty” project

Commissioned by: DG Employment of the European Commission, Unit E2

Consortium: Tárki Social Research Institute, Budapest Applica sprl, Brussels

Steering Committee:

Terry Ward (chair) ApplicaMichael F. Förster OECDHugh Frazer National Univ. of IrelandPetra Hoelscher UNICEFEric Marlier CEPS/INSTEADHolly Sutherland University of EssexIstván György Tóth TÁRKI

Tasks within the project

Task 1. „An in-depth empirical analysis of child poverty and the related key challenges for each Member State, starting from the analytical framework developed up by the EU Task-Force report.”

Task 2. „An assessment of the effectiveness of policies for combating child poverty and promoting social inclusion among children and the identification of policy mixes that seem to be most effective in tackling the specific factors underlying child poverty.”

Task 3. Recommendations for a limited set of child well-being indicators

Aim and methodology

Aim of the paper: to provide international benchmarking and to identify key challenges for each Member State to assist national policy practicesMethodology (building on EU Task-Force 2008) To assess the performance of countries in the field of child

poverty relative to the national average/adult population the EU-average

Four dimensions Child poverty risk outcomes Joblessness In-work poverty Impact of social transfers

Poverty among children, in general, is higher than that of the overall population

Every fifth child is at-risk-of-poverty in the EU-27Child poverty is specifically high in ROMuch higher than the population average: HU, also in CZ, LU, RO, SKLower than the population average in: DK, EE, CY, FI

--------------------------------------The severity of poverty is more similar to the population as a wholeRelatively high in: BG, RORelatively low in: FR, CY, NL

At-risk-of-poverty rates: overall population and children, EU-27, 2008

Source: EUROSTAT

0

5

10

15

20

25

30

35

DK FI SI SE NL CZ CY AT DE SK FR BE EE IE HU LU MT EU-27

PL UK PT LT EL ES LV IT BG RO0

5

10

15

20

25

30

35

40

45

National at-risk-of-poverty rate

Children at-risk-of-poverty rate

Children at-risk-of-poverty gap

Child poverty outcomes – country clusters

Indicators included in this task: at-risk-of-poverty rate relative median poverty gap both based on EU-SILC

z-scores based on the difference between the

national figure for children and the overall national figure

the difference between the national figure and the EU average for children

z-scores added together, without weightingSix clusters

to maximise the “steps” between the groups

to minimise the variations within the groups

Good performers: Northern countries, DK, CY, FR, SI

Bad outcomes: BG, RO, Southern countries, PL, LT

-4

-2

0

2

4

6

8

DK CY FI SI NL SE DE AT EE BE FR CZ IE MT LU UK HU SK LV EL PL LT PT ES IT BG RO

Almost 1 children in 10 in the EU lives in jobless households

Reasons for joblessness can be found on both the supply and demand side

Lack of or inadequate human capital of parents

Counter-incentives of income supports

Shortage of childcare Regional and/or ethnic

segregation

Children in jobless households are likely to live in lone parent families: BE, EE, IE and the UKChildren in large families are affected in HU

Share of children (0-17) and adults (18-59 – not students) living in jobless households, EU-27*, 2008 (%)

Source: EUROSTAT (EU-LFS)*Data for Sweden are from EU-SILC (WI=0)

0

2

4

6

8

10

12

14

16

18

SI SE DK EL LU CY FI PT NL AT ES IT EE CZ LV PL FR SK MT EU-27

DE LT RO BG BE IE HU UK

Share of adults in jobless households Share of children in jobless households

Joblessness – country clusters

Input indicators: share of children in jobless

households based on EU-LFS

z-scores based on the difference between the

national figure for children and the overall national figure

the difference between the national figure for children and the EU average for children

z-scores added together, without weightingSix clusters

to maximise the “steps” between the groups

to minimise the variations within the groups

Good performers: Northern countries, SI, LU, EL, DK, FI

Bad outcomes: UK, HU, IE

-3

-2

-1

0

1

2

3

4

5

6

SI LU EL DK FI SE IT CY AT NL PT ES PL FR EE RO LV CZ MT DE SK BE LT BG HU IE UK

In-work poverty

Similar share of children in in-work (WI>=0.50) households across countriesLarge variation in the risk of povertyHigh in RO, Southern countries, Baltic States, LU, PLReasons behind

Low wages Not full participation in the

labour market Only one parent in

employment Part-time work Shortage of childcare Social norms

Source: own calculations based on EU-SILC 2008*No data available for Malta. Data for France are from 2007

In-work (WI>=0.50) poverty in the EU-27*, 2008

0

5

10

15

20

25

30

35

CZ DK FI SI FR SE BE DE IE NL AT HU CY BG SK EE UK EU-27

LU LT PL LV PT IT EL ES RO

At-risk-of-poverty rate of adults in in-work households

At-risk-of-poverty rate of ch in in-work hhs

In-work poverty – country clusters

Input indicators: in-work poverty: at-risk-of-

poverty rate for those living in hhs with WI>=0.50,

based on EU-SILCz-scores based on

the difference between the national figure for children and the overall national figure

the difference between the national figure for children and the EU average for children

z-scores added together, without weightingSix clusters

to maximise the “steps” between the groups

to minimise the variations within the groups Good performers: DK, SE, FI, SI, CZ, DE

Bad outcomes: RO, ES, IT

-3

-2

-1

0

1

2

3

4

5

6

DK SE FI SI CZ DE IE FR BE AT CY NL HU EE BG UK SK EL LU PL LV LT PT IT ES RO

Social transfers reduce the proportion of children at risk of poverty by 38% in the EU as a whole

The effectiveness of transfers reflects both the scale of expenditure level and the extent of targetingHighest impact in: DK, FI, SE, as well as in DE, FR, HU, AT, SILowest: EL, ES, ITSerious limitations of the EU-SILC

No behavioural responses are considered

No full account of taxes and social contributions

No account of transfers via the tax system

Hard to identify child-contingent payments

Effects are likely to be over-estimated

Source: EUROSTAT, own calculations based on EU-SILC 2008 (version 01.03.2010).

The effectiveness of social transfers (excl. pensions), EU-27, 2008

0

5

10

15

20

25

30

35

40

45

50

DK FI SI SE NL CZ CY AT DE SK FR BE EE IE HU LU MT EU-27

PL UK PT LT EL ES LV IT BG RO

0

10

20

30

40

50

60

70

At-risk-of-poverty rate of children after social trannsfers (excl. pensions)

At-risk-of-poverty rate of children before social trannsfers (excl. pensions)

Poverty reduction impact of social transfers (excl. pensions) on child poverty

Impact of social transfers

Input indicators: at-risk-of poverty rate after and

before social tranfers (excl. pensions),

poverty reduction effect of transfers

based on EU-SILCz-scores based on

the difference between the national figure for children and the EU average for children

z-scores added together, without weightingSix clusters

to maximise the “steps” between the groups

to minimise the variations within the groups

Good performers: Northern countries, AT, HU, CZ, IE

Bad outcomes: BG, RO, Southern countries, Baltic States

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

SE FI DK AT HU CZ IE DE FR SI BE NL UK LU SK MT EE PL CY LT PT RO LV IT BG ES EL

Relative outcomes of countries related to child poverty risk and main determinants

Group A: good performers in all dimensions

  Child poverty risk outcomes Joblessness

In-work poverty

Impact of social tr.

Group A DK + + + + + + + ++ + + +

EE + + + + –

FR + + + + + +

CY + + + + + + + –

NL + + + + + + +

AT + + + + + + + + +

SI + + + + + + + + + +

FI + + + + + + + + + + +

SE + + + + + + + + + +

Determinants and policies in place in Group A countries

High levels of economic activity and employment generally – high share of dual earner families in most countries

The Netherlands: the second earner being in part-time job is predominant

Austria: the single earner model is dominant, high earnings and income support compensating for the lack of a second earner; the model featuring one full-time earner and a part-time earner is also considerable

Extensive and affordable childcare provision Cyprus: informal childcare arrangements

Adequate income support

DK, SE, FI: high level of universal income support and extensive support for parents to enter/re-enter employment

Slovenia: high level of support targeted on low-income families in SI Income support narrowly targeted, focus on maternity benefits in France

Relative outcomes of countries related to child poverty risk and main determinants

 Child poverty risk

outcomes JoblessnessIn-work

povertyImpact of

social tr.

Group B

BE + – + + + +

CZ + – + + + + +

DE + + – + + + +

IE + – – + + + + +

HU – – – + + + +

BG – – – – + – – –

Group B: joblessness is key challenge

Determinants and policies in place in Group B countries

Large number of children living with lone parents (BE, DE, IE)

Children with migrant background are at high risk and count for a large share of those at risk of poverty in most of these countries

Relatively effective income support

Inadequate childcare provision – limited in number of place, opening hours and affordability

Low level of support to help women with children into employment

Inflexible working hours

Relative outcomes of countries related to child poverty risk and main determinants

  Child poverty risk outcomes Joblessness

In-work poverty

Impact of social tr.

Group C

LV – – – – – –

LT – – – – – –

SK – – – +

UK – – – – – +

RO – – – – – – – – –

Group C: relatively bad performance in all dimensions

Determinants and policies in place in Group C countries

The cluster is fairly unstable across the 2005-2008 period

Poor outcomes are rooted in the inadequate labour market participation of families with children

inadequate income support to prevent children to a large extent from staying poor

SK, UK: better outcomes compared to the others, mostly due to relatively effective benefits

Relative outcomes of countries related to child poverty risk and main determinants

  Child poverty risk outcomes Joblessness

In-work poverty

Impact of social tr.

Group D

EL – – + + + – – – – –

ES – – + – – – – – –

IT – – + + – – – – –

LU – + + + – – +

PL – – + – – –

PT – – + + – – – –

Group D: in-work poverty is key challenge

Determinants and policies in place in Group D countries

Low levels of income support, especially for older children

Support narrowly targeted – in PL on very poorest or lone parents (6% of children), in EL on large families (10%)

Lack of childcare provision

Traditional reliance on extended family for childcare in IT, ES+EL

Employment rates low generally and support policies limited; fixed term jobs common except in IT

No minimum wages in EL or IT and set at low level in PL

But in ES especially, signs of change – reduction in fixed-term jobs, rise in minimum wages, new child tax allowances

Determinants and policies in place in Hungary

Key challenge: large number of children in jobless and low work intensity householdsMain characteristics of the poverty profile: large families (two parents with 3+ children) are affected most the role of education is very strong the settlement gradient exists important regional inequalities strong effect of the ethnic background

Income supports are effective in a cross-EU comparisonThere are important obstacles for parents to enter the labour market: high costs of searching jobs, regionally unequal demand, the lack of adequate human capital, inadequate childcare opportunities, counter-incentive effect of income supports

How to go ahead with the analysis?

To extend the analysis using multilevel modelling: to take into account additional dimensions on the

explanatory side at individual (hh) level (hh composition, socio-economic status of parents, settlement, migrant status)

national level institutional variables to better differentiate between countries in terms of policy effectiveness and efficiency

Microsimulation

Thank you for your attention!

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