Download Welfare Regimes and Poverty Dynamics The Duration and

Welfare Regimes and Poverty Dynamics: The
Duration and Recurrence of Poverty Spells in
Europe
Didier Fouarge & Richard Layte
Presented by
Anna Manzoni
Socrates Program 2008, Komotini 4-14 March
Motivation
Dynamic perspective on poverty:
- Mobility
-
Persistence
 do we see the same or different people in poverty?
 Are poverty spells short/long in duration? Do people remain in poverty?
 Is poverty recurrent?
‘Time’ has to be part of the definition of poverty use of longitudinal data
to understand the processes behind cross-sectional statistics, the
events leading individuals to and from poverty and the impact of this
povert on their living standards
Previous findings
• There is a great deal of turnover in the stock of people living in
poverty
• The majority of poverty spells are rather short in duration
• However, many of those who have left poverty return relatively
quickly
• A substantial minority experience persistent poverty
This paper
• How well the different welfare states of Europe perform in terms
of preventing recurrent and persistent income poverty
• What household and individual characteristics influence poverty
duration
• Esping-Andersen (1990) “Three worlds of welfare
capitalism”
Socialdemocratic
(Denmark)
- Redistribution
- Prevent poverty
and inequality
- Full
employment
Corporatist
(Germany)
Liberal
(UK)
Meridional
(Spain, Greece)
- Promote social
integration
- Selective
system of social
security
- Full
employment
- Avoid
dependence on
social security
- Familiar
solidarity
- Minimalist
system of social
security
Research questions
• To what extent does the level of recurrent and persistent poverty
vary across countries?
• To what extent is this a function of the distribution of different
socio-economic variables in the country rather than the welfare
regime type?
• Are transition rates from poverty and average durations of
poverty in different countries related to the welfare regime?
• To what extent is the probability of leaving poverty influenced by
particular socio-economic predictors (employment status,
human capital, hh context) rather than welfare regime type?
Hypotheses
• HP 1: Social democratic countries have lower rates of both
recurrent and persistent poverty compared to corporatist
• HP 2: Disadvantaged groups and those who are unable to
participate in the LM will have a higher risk of recurrent and
persistent poverty in all other regimes compared to the social
democratic
• HP 3: Social democratic welfare regime countries have higher
initial exit rates but lower levels of incentives will lead to sharply
falling exit rates from poverty as duration increases.
Summary indicator of longitudinal poverty:
Poverty profiles (Muffels, 1999)
• never poor
• single-year or transient poor
• recurrent poor (poor more than once but never
longer than two consecutive years)
• persistent poor (at least three consecutive years in
poverty)
Data: 5 waves of ECHP, 1994–8
Poverty line = 60% median standardised hh income
Social democratic
Never poor
Transient poor
Recurrent poor
Persistent poor
78
11
6
5
Denmark
77
13
6
4
The Netherlands
78
10
6
6
Corporatist
71
11
8
10
Germany
73
11
8
8
Belgium
64
13
11
12
France
69
10
8
13
Southern
62
13
11
14
Italy
64
11
10
15
Greece
62
13
11
14
Spain
61
13
13
13
Portugal
62
13
12
13
Liberal
59
14
12
15
Ireland
60
14
15
11
Great Britain
59
14
9
18
Europe
66
12
10
12
From our data
• 1/3 of the EU population is found to experience poverty at least
once in the 1994-98 period
• 1/3 of the ever poor are only poor for a single year
• 12% of the EU population is found to be persistently poor
• Lowest poverty incidence: The Netherlands
• Highest poverty incidence and persistence: Greece and
Portugal
•  social democratic countries display lower rates of poverty
- corporatist countries
- Higher, more recurrent and persistent poverty: residual and
liberal welfare regimes
Determinants of poverty profiles
•
Ordering among the profile categories
•
-
Predicting factors:
HH formation events
LM events
•
-
Control vars:
Personal and HH characteristics
Socio-economic characteristics
Model 1: LM and HH status vars
Model 2: add country dummies
Model 3: add regime type dummies
Ordered logit; ref = never poor; signif 1% (head & partner 25-65)
Head has average education (ref: high education)
Head has low education
Only male employed (ref: both partners employed)
Only female employed
None employed
Single male working
Single female working
Single male not working
Single female not working
Unemployment in past 5 years
Household head reports (very) bad health
Male partner lost job (ref: no change)
Male partner found job
Female partner lost job (ref: no change)
Female partner found job
Less children (ref: no change)
More children
Separation
0.260
0.68
0.548
0.626
1.076
0.326
0.396
1.376
1.258
0.424
0.262
0,257
-0,354
0,263
-0,383
-0,667
-0,410
0,492
Ireland (ref: Great Britain)
Denmark
Netherlands
Germany
Belgium
France
Italy
Greece
Spain
Portugal
Social democratic (ref: Liberal)
Corporatist
Southern
n.s.
-334
-0.285
-0.131
-0.449
n.s.
0.188
n.s.
-0.307
-0.309
Model 2
Model fit (pseudo-R2)
Country model: 0.152 …
Regime model: 0.150 …
-0.257
-0.207
-0.038
Model 3
Single parents
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Liberal
Never poor
Social democratic
Transient poor
Corporatist
Recurrent poor
Southern
Persistent poor
Couple, both partners out of employment
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Liberal
Never poor
Social democratic
Transient poor
Corporatist
Recurrent poor
Southern
Persistent poor
Duration of spells
•
•
•
•
Model exits from poverty (discrete-time hazard model)
Account for left and right censoring
Account for multiple spells
Correct for unobserved heterogeneity
H it  PrTi  t | Ti  t , X it 
Hazard rates by country
Spell
Length
1
2
3
Spell
Length
1
2
3
Denmark Netherlands Belgium France Germany
Europe
0.460
0.313
0.237
Italy
0.552
0.370
0.192
Greece
0.477
0.233
0.246
Spain
0.479
0.259
0.179
Portugal
0.428
0.328
0.140
U.K.
0.476
0.330
0.157
Ireland
0.486
0.372
0.169
0.421
0.297
0.259
0.497
0.325
0.220
0.405
0.299
0.327
0.417
0.272
0.345
0.472
0.282
0.254
- Exit probabilities fall quickly between the 1st and the 2nd year
Across regimes:
- The overall spread of rates in the 1st year is quite small
- Social democratic countries have the highest initial exit rates
- The Southern and liberal countries tend to have the lowest rates in the 1st year
but over e 3-year period any resemblance of a regime order is lost
 there is very little variation across countries in exit rates over a 3-year period,
but this overall similarity stems from different patterns of exit between countries in
different regimes
Weibull Discrete-Time Hazard Model
•
To estimate the probability of making a transition from poverty and its
dependence on time
• The hazard of exit from poverty decreases with duration: each additional period
in poverty decreases the probability that the person will leave the state
• Covariates:
- female head
- old head
- low educated head
slow down exit from poverty
- each additional child
- unemployment/non participation
•
Across countries: no significant difference.
Despite the differences in poverty persistence among welfare regimes, different
patterns of exit from poverty lead, over the medium term, toroughly similar rates
of exit from poverty for countries with different welfare regimes
• Couples with children have a greater probability of experiencing
poverty
• Positive and significant effect for the # of children
 Tentative explanation:
- young children coming into the HH induce an additional
financial burden that is generally less than compensated by
child benefits;
-children leaving the HH are generally older and have their own
market income, which may have negative consequences on the
HH’s income position
Conclusions
•
•
•
Poverty profiles = useful summary measure of poverty
Consider household labour supply in poverty studies
Country and welfare regime effects
•
Persistent and recurrent poverty highest in liberal and southern
regimes
Vulnerable groups less at risk of poverty in social democratic
countries. Significant higher risk in liberal countries
Despite their dissimilar patterns of poverty duration, European
welfare states display rather similar probabilities of exit from
poverty, once controlling for duration, though these similar rates
may be the result of very different processes with social democratic
and corporatist countries having high exit rates that decrease
quickly whereas liberal and Southern European countries have
moderately high rates that remain more constant over time
•
•