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Inequality, poverty, social exclusion and policy John Hills ESRC Research Centre for Analysis of Social Exclusion International Centre for Health and Society.

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Presentation on theme: "Inequality, poverty, social exclusion and policy John Hills ESRC Research Centre for Analysis of Social Exclusion International Centre for Health and Society."— Presentation transcript:

1 Inequality, poverty, social exclusion and policy John Hills ESRC Research Centre for Analysis of Social Exclusion International Centre for Health and Society 23 October 2002

2 Views of ‘what is social exclusion?’ Links between dimensions of exclusion Links over time: incomes Does talking about ‘social exclusion’ change the policy agenda? How well are current policies matching up?

3 What is ‘social exclusion’? Social Exclusion Unit “… a short-hand label for what can happen when individuals or areas suffer from a concentration of linked problems such as unemployment, poor skills, low income, poor housing, high crime, bad health and family breakdown”

4 Ruth Levitas (‘The Inclusive Society’) MUD:Code for ‘the underclass’ SID: Focus on participation in paid work. Ignores importance of unpaid work and poverty of non-workers RED:Poverty is the central issue, but goes beyond material poverty, and focuses on processes that produce inequality

5 Concepts of Social Exclusion Narrow focusWider focus Static framework Dynamic framework Exclusion as extreme deprivation Income poverty Deprivation (multi- dimensional) Poverty as ‘non participation’ Income mobility / poverty dynamics Exclusion as a process affecting participation in several dimensions

6 ‘……incorporating multidimensional measures of disadvantage into poverty measurement…in effect forces one to make to make the shift to a dynamic analysis of processes’ (Nolan and Whelan, 1996)

7 ‘If…poverty is seen in terms of income deprivation only, then introducing the notion of social exclusion as part of poverty would vastly broaden the domain of poverty analysis. However, if poverty is seen as deprivation of basic capabilities, then there is no real expansion of domain of coverage, but a very important pointer to a useful investigative focus’ (Sen, 2000)

8 FOUR ASPECTS OF ‘SOCIALEXCLUSION’ It is about participation in today’s society. Inclusion/exclusion are matters of degree. They are relative to the society in question. Multi-dimensional: includes income/consumption poverty, but also involvement in productive activity, political participation and social interaction. Dynamics: inclusion and exclusion are processes which happen over time. Multi-layered: operates at different levels – individual, household, community/neighbourhood, institutions.

9 Evidence on extent of exclusion: summary There’s not much social exclusion about: no evidence of an ‘underclass’ There’s lots of social exclusion about: the links between dimensions and over time are strong, but not deterministic

10 No evidence of an underclass? The excluded group are, compared to general population: Thirteen times as likely to have been in care Thirteen times as likely to be unemployed Ten times as likely to have been a regular truant and twenty times as likely to have been excluded from school Six times as likely to have been a young father Fifteen times as likely to be HIV positive 80 per cent have writing skills, 65 per cent numeracy skills, and 50 per cent reading skills at or below age 11 60-70 per cent were using drugs Over 70 per cent suffer from at least two mental disorders Half had no GP

11 Indicators of social exclusion DimensionIndicator and threshold ConsumptionEquivalized household net income is under half mean income ProductionNot employed or self-employed, in education or training, or looking after family (I.e unemployed, long-term sick or disabled, early-retired or ‘other’) Political engagementDid not vote in general election and not a member of a campaigning organization (political party, trade union, parents association, or tenants/residents association) Social interactionIn any one of five respects, lacks someone who will offer support (listen, comfort, help in crisis, relax with, really appreciates you) Source: Burchardt et al (2002)

12 Exclusion at a point in time, by year and by dimension (% of working-age population) YearConsumptionProductionPolitical Engagement Social Interaction 19911613n/a12 1992171417n/a 19931714n/a10 19941714n/a 19951513n/a9 19961513n/a 19971612219 1998n/a12n/a Source: Burchardt et al (2002)

13 Exclusion on multiple dimensions, Wave 7 of BHPS Number of dimensions on which excluded Percentage of working age population 057.5 130.1 210.0 32.3 40.1 0-4100 Source: Burchardt et al (2002)

14 Low income and exclusion on different dimensions, wave 7 (%) Income quintile Group ProductionPolitical engagement Social interaction Bottom4628 2 nd 242321 3 rd 151819 4 th 917 Top61416 All100 Source: Burchardt et al (2002)

15 Exclusion over time on multiple dimensions, by Wave 8 Source: Burchardt et al (2002)

16 Short-term income mobility Quintile group in 1991/1992 Quintile group in 1993/1994 Bottom 234 Top Bottom64221031 224482052 392246195 425205320 Top0341974 Source: Jarvis and Jenkins (1998); BHPS

17 Longer-term income mobility Quintile group in 1991 Bottom234Top Quintile group in 2000 Bottom 45241597 2243223148 31520272414 41015203025 Top69142446 Source: DWP (2002); BHPS

18 Intergenerational Earnings mobility: Father’s earnings quartile Son’s earnings Quartile 1958 cohort Bottom23Top Bottom30292517 228252620 323242529 Top19222434 1970 cohort Bottom38301913 22529 16 322 2728 Top15192543 Source: Blanden et al (2002)

19 From childhood poverty to low wage employment (%) Cohort born in 1958 Household income age 16 Cohort born in 1970 Household income age 16 Wage (quintile group) High income Low income PoorHigh income Low income Poor Bottom172228132630 2 nd 192122162325 3 rd 20191820 17 4 th 2119172416 5 th 221815261412 All 100 Source: McKnight (2002)

20 Summary: Income mobility patterns There is quite a lot of short-term mobility, but mostly short range Current income is strongly linked to past income Recurrent poverty is more common than remorseless poverty Poverty in the UK and US is more persistent than in other OECD countries There was little change in poverty persistence in the UK in the 1990s Intergenerational links in earnings are strong but not determinant Intergenerational links appear to have strengthened, comparing those growing up in 60s and 70s, with those growing up in 70s and 80s.

21 Childhood experiences and risks of adult exclusion Consistent and powerful childhood predictors of unfavourable adult outcomes: childhood poverty; family disruption; contact with police; and educational test scores. Children who experienced consistent poverty were two and a half times as likely to have no qualifications by age 33. Boys who were poor were a quarter as likely to gain degree- level qualifications. Low income in adulthood is related to: poor performance at school; lack of parental interest in schooling (especially men); and childhood poverty Adult benefit receipt is linked to: poor test scores; childhood poverty; father’s interest in schooling (men); and family circumstances (women) Source: Hobcraft (1998),

22 Adult negative outcomes showing largest odds ratio for each childhood variable (women) Child factorOutcomeOdds ratio Clear povertyNo qualifications2.6 Clear contact with policeNo qualifications3.7 Low Test scoresNo qualifications Teenage Mother Social Housing 26.8 3.7 2.7 Low Father’s interest in school No qualifications3.7 Low Mother’s interest in school No qualifications2.5 Born out-of-wedlockExtra-Marital Birth2.5 Ever in careExtra-Marital Birth3.7 Divorce3+ Partners2.3 Source: Hobcraft (2002); NCDS

23 Source: Hobcraft and Kiernan (1999)

24 Drivers of links across the early life-course Childhood circumstances matter Early test scores have major links to outcomes But controlling for a wide range of initial factors, childhood poverty is still associated with adverse outcomes Family/demographic circumstances matter: eg. teenage motherhood is more strongly associated with adverse outcomes than poverty childhood Particular childhood factors link most strongly to similar adult factors

25 Does a focus on ‘Social Exclusion’ change the policy response? Does a focus on ‘social exclusion’ produce different policies to focus on ‘poverty’? Are groups affected by persistent/recurrent low income different from poor in a snapshot? Does a dynamic focus change policy to an ‘active welfare state’? Do insights from longitudinal analysis change priorities? What has impact been in practice since 1997?

26 Characteristics of those with low and persistently low income and persistently low income 1995-98 % of whole population % of poorest 30% at any one time % with persistently low income By family type Couple with children Couple without children Single with children Single without children Pensioner couple Single pensioner 36 21 7 16 10 35 10 13 12 13 17 33 5 15 7 17 21 By Tenure Owner-occupied Social rented Private rented 69 22 8 48 41 10 43 48 8 By economic status Fully employed Partially employed Workless Pensioner Self-employed 29 25 14 17 15 7 21 34 27 11 6 15 37 35 6

27 Four forms of intervention Intervention to change: Focus of intervention: Risk of eventEffects of event Entry to adverse state PreventionProtection Exit from adverse state PromotionPropulsion

28 Summary: Can focussing on ‘social exclusion’ help? Focusing on ‘social exclusion’ can draw attention to deprivation beyond cash, or at least emphasise that this should be focus Understanding dynamics does allow differentiation of circumstances and refinement of policy. Thinking about dynamics suggests making sure that policy does achieve all of ‘prevention, promotion, protection and propulsion’. Can be returns in identifying key events or characteristics with long-term effects. Emphasis on inclusion may affect choice of service delivery. But in practice…..?

29 Focussing on ‘social exclusion’ in practice: Policies since 1997 Code for ‘the underclass’, with personal responsibility for their fate, and no cause for public action? A diversion towards ‘softer’ issues, away from more difficult – and harder – ones of material deprivation and redistribution? Certainly no lack of policy! ‘Poverty’ has not been ignored: Blair’s child poverty pledge

30 Combination of SEU (long-term drivers) agenda and Treasury-driven (stealthy?) redistribution Analysis suggests that this mixture is necessary – need both short-term protection and long-term prevention Policies have navigated with public attitudes – hence emphasis on work-based strategies for working age population. But in contrast to US, benefits for non-working families have also risen. The big question is whether the scale of action is enough?

31 Real increases in benefits, April 1997 to April 2003 April 97 April 03 Real increase (%) Child element of child tax credit - Under 11 - 11-16 12.05 19.95 27.75 102 22 Child Benefit - First child - Further children 11.05 9.00 16.05 10.75 27 5 Family Credit / CTC maximum support (16-29 hours, 2 children under 11) 71.75150.7584 Income Support - Two children under 11 - Total, single parent, one child - Total, couple, two children 44.60 81.80 121.75 92.75 109.10 179.10 82 17 29

32 Five Labour Budgets: proportional changes in income Source: Microsimulation Unit, Cambridge University % increase in income Income group (tenths of individuals)

33 Modelled impact of 1997-2001 policies on child poverty in the UK Whole Population Children One Two All Parent parents Poverty rate ‘unchanged policy’ from April 1997 (%) 19.441.921.525.9 Poverty rate with tax and benefit changes (%) 14.018.815.015.8 Source: Sutherland (2001) Note: Poverty line is 60% of median equivalent income before housing costs. Figure shows first round impact effects only.

34 Proportion of children falling below 60% median relative income poverty lines evaluated in six-month periods Source: IFS

35 Impact of Labour Budgets 1997-2000 compared to income indexation of tax/benefit system Source: Sutherland (2000); Hills (2000)

36 Four possible conclusions There’s not very much social exclusion about There’s lots of social exclusion about Talking about ‘social exclusion’ makes no difference to policy Talking about social exclusion can make – and has made – a difference to policy

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