Presentation on theme: "Social Cohesion and Social Policy: Does income inequality matter?"— Presentation transcript:
1 Social Cohesion and Social Policy: Does income inequality matter? Sarah CarpentierIve MarxKarel Van den BoschCentre for Social Policy Herman DeleeckBrussels, May 15th 2008
2 Outline Social cohesion in policy: definitions, indicators Does income inequality matter ?The production of equality, or the puzzle of egalitarianismConclusion
3 Social cohesion in policy: definitions and indicators
4 Social cohesion as a goal of social policy By several policy actorsLocal (e.g. UK)Regional (e.g. Walloon region)National (e.g. Canada)Supranational (e.g. EU, OECD, Council of Europe)
5 Council of Europe (2005) Definition Four central principles = a society’s ability to secure the long-term well-being of al its membersFour central principlesFair and equal access to ressourcesIndividual and collective dignityAutonomy of the individualParticipation in community lifeSocial, economic, cultural, political cohesion & sustainability
6 Council of Europe (2005) Indicators four levels of analysis (from general to specific)Main indicators: social cohesion trendIndicators of public actions which are constituents of well-being (shared responsibility)Specific life domains (employment, income, housing)Sensitive situations & vulnerable groups=> Beyond inequality and poverty measures, but remain key indicators
7 OECD (2006) Definition No definition Pathologies inform about a lack of cohesionCentral concept: social developmentFostering social cohesion: a policy goalbesides of enhancing self-sufficiency, equity & healthEconomic and social well-being(and sustainability)
8 OECD (2006)IndicatorsAim: capturing changes in outcomes that social policies try to influence with limited ressources3 types of indicatorsSocial contextSocial status (outcomes)Societal response
9 OECD (2006) Indicators Social cohesion indicators: social status Overall well-being (life satisfaction)Societal dysfunctions (suicide, work accidents)Social conflict (strikes)Political parcipation (voting) and trustsocietal responseNumber of prisonersMain social development indicators: employment and unemployment, inequality, poverty and deprivation
10 EU No explicit definition 2 main conceptualisations, rooted in historically developed policiesEU regional cohesion policyEU social cohesion pillar of the Lisbonstrategy
11 EU Regional Social Cohesion Policy DefinitionEconomic, social and territorial cohesion:reducing economic and social disparities between regions to create an economic space attractive to invest and to work inSocial cohesionpoorly stressedSeen as integration in the labour marketEconomic and territorial cohesion(and sustainability)
12 EU Regional Social Cohesion Policy Indicators: GDPPolicy: Structural Funds and Cohesion Fundsecond largest budget item EU: 350 billion euro(+ 150 billion euro of public/private national means)
13 Lisbon strategy –social cohesion To become the most competitive and dynamic knowledge-based economy in 2010 withA strong economic growthMore and better jobsGreater social cohesionSustainability (2001, Göteborg)economic and social cohesion (and sustainability)
14 Lisbon strategy –social cohesion No explicit definition of social cohesionSocial cohesion = European social modelNo clear concept, assumes (Jepsen & Serrano Pascual):Dichotomy with USIntegration of economy and social policyCovers solidarity embodied by (Jeanotte)Universal social protection systemRegulation for market correctionSocial dialogueOMC: social protection and social exclusion prevail
15 Lisbon strategy –social cohesion IndicatorsOutcome indicators (in line with subsidiarity principle)(also social spending and context indicators are asked)3 level structure:1st level: key indicators Commonly agreed2nd level: in-depth indicators3rd level: Nation-specific indicatorsConsists ofIndicators on inequality and (relative) poverty: very prominent!Indicators about life domains (employment, health, education, housing)Breakdowns for vulnerable groups
16 Lisbon strategy –social cohesion Policy:Reports (in line with subsidiarity)Member states: National Strategic Reports on Social Protection and Social InclusionEU: Joint Report Social Protection & Social Inclusionthe_process_en.htmAims at coordination through agenda-setting and mutual learning
17 Concluding Social cohesion has multiple meanings in policy use Differences in breadth of dimensions includedHence, also multiple ways of measuringAlthough, generally acknowledged as multi-dimensional phenomenon, reduction of inequality and poverty presents consensus dimension (= seen as threats) (cf. Jeanotte)Indicators about poverty and income inequality (and to a lesser extent labour market participation and unemployment) are prominently used
19 2. Does income inequality matter? Evidently, policy makers say ‘yes’, but why?Income inequality is multi-faceted phenomenon:Result (indicator) of inequities (exclusions)Result of factors without normative bearingCause of bad things (see below)Current income is:only (important) part ofyet good indicatorof wider inequality in economic resources
20 2. Does income inequality matter? Income inequality does not necessarily imply relative poverty,but the two are in fact closely related.
21 2. Does income inequality matter? Effects of income inequality on other life-domains area of intense research and debate.On the one hand, Burtless and Jencks (2003):“the effects of inequality on economic growth, health, and equality of opportunity are modest and uncertain in rich countries”
22 2. Does income inequality matter? On the other hand, Wilkinson (2007):“many problems associated with relative deprivation are more prevalent in more unequal societies … this may be true of morbidity and mortality, obesity, teenage birth rates, mental illness, homicide, low trust, low social capital, hostility and racism”Some illustrations of this follow:
23 2. Does income inequality matter? Income inequality and rate of mental illness:
24 2. Does income inequality matter? Income inequality and educational achievement:
25 2. Does income inequality matter? Income inequality and imprisonment:
26 2. Does income inequality matter? However,Causal mechanisms remain obscureWilkinson: low position breeds stressRelationships disappear (or are reversed) in ‘panel-of-countries’ approach, i.e. no link between changes in income inequality and bad outcomes.
27 3. The production of equality, or, The Puzzle of Egalitarianism
28 3. The Puzzle of Egalitarianism How can public policy promote greater equality (less inequality, less relative poverty)?Three broad strategies:Income redistribution through social insurance or social assistanceProviding goods & services free or at reduced cost (health care, education, housing)Investing in market-income generating abilities of individuals, esp. children
29 3. The Puzzle of Egalitarianism Despite the ‘Active Welfare State’ etc. most resources go to the 1st (and 2nd strategy).Also, doubts about the effectiveness of the Activation StrategyThe question is then:Does income redistribution reduce inequality?Looking at simple cross-country correlations, the question is yes.
30 3. The Puzzle of Egalitarianism high social expenditure implies a low rate of relative poverty.
31 3. The Puzzle of Egalitarianism But: problem of counterfactual: what would have been the level of inequality in the absence of social expenditure?Not necessarily the same across countriesCounterfactual problem has basically no solutionSuggestive evidence: Inequality in wages is negatively related to social expenditure
32 3. The Puzzle of Egalitarianism fewer low paid workers, more social expenditure
33 3. The Puzzle of Egalitarianism Possible reasons for this relationship:second-order effects of high benefits and high taxes and contributions.high wage dispersion, large market inequalities make redistribution difficult(social insurance for the self-employed in Belgium)high level of solidariy (social cohesion?), embedded in institutions, produces low wage dispersion and enables high level of income redistribution.
34 3. The Puzzle of Egalitarianism In supranational social cohesion policies: Inequality (and poverty) are common dimensions in defintion and indicatorsEffect of income inequality on other life domains is area of intense research and debateSuggestive evidence that income redistribution reduces inequality
35 4. ConclusionInequality (and poverty) constitute a consensus dimension in definitions and indicators used by social policy actorsEffect of income inequality on other life-domains is area of intense research and debateSuggestive evidence that income redistribution reduce inequality