Children of the Recession The impact of the economic crisis on the well-being of children in rich...

Children of the RecessionThe impact of the economic crisis on the well-being of children in rich countries.

A review of research underpinning Report Card 12

Dr Yekaterina Chzhen and Luisa NataliSouthampton

November 10, 2014

Innocenti Report Card 12Children in the Developed World


OECD countries were affected by the most severe recession since WWII

19701971

19721973

19741975

19761977

19781979

19801981

19821983

19841985

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

-6

-4

-2

0

2

4

6

GDP per capita growth (annual %)

Outline of the RC

• Introduction– Biggest economic crisis since WW2—how did children fare?

• The League Tables– Change in child poverty since the crisis (2008-2012)– Change in NEET since the crisis– Opinion polls on change in quality of life during this period– Each measures different dimension of family well-being

• Relationship between the crisis and children’s well-being– Trend lines by exposure– Children versus other groups

• Policy responses– Expansion then austerity


League Table 1: Change in child poverty (anchored in 2008)

• Between 2008 and 2012, child poverty increased in 23 of 41 rich countries.

• Largest relative increase in child poverty:

– Iceland (+182%)– Greece (+76%)– Croatia (+75%)

• Highest level of child poverty in 2012:– Greece (40.5%)– Latvia (38.2%)– Spain (36.3%)

• Largest net increase in the number of poor children:

– Mexico (+2 million)– United States (+1.7 million)– Spain (+0.8 million)

• Overall, the net increase in the number of poor children: 2.6 million.

Rank Country

Change

(2008-2012)

1 Chile -8.672 Poland -7.903 Australia -6.274 Slovakia -5.605 Switzerland -4.806 Norway -4.30

7Republic of Korea -3.40

8 Finland -3.209 Turkey -2.76

10 Japan -2.7011 Canada -2.4412 Romania -2.3013 Belgium -0.8013 Sweden -0.8015 Austria -0.7016 New Zealand -0.40

17Czech Republic -0.40

18 Germany -0.2019 Israel 0.5520 Bulgaria 0.6020 Malta 0.6022 Netherlands 1.0022 Portugal 1.0024 Denmark 1.10

25United Kingdom 1.60

26 Slovenia 1.8027 United States 2.0628 Cyprus 2.7029 Hungary 2.9030 France 3.0031 Mexico 5.0032 Estonia 5.1033 Italy 5.7034 Luxembourg 6.5035 Spain 8.1036 Lithuania 8.3037 Ireland 10.6038 Croatia 11.8039 Latvia 14.6040 Greece 17.5041 Iceland 20.40

31.4

22.4

19.2

16.7

19.5

9.6

16.8

12.0

33.0

21.7

23.2

32.9

17.2

12.9

14.9

18.8

13.2

15.2

35.1

25.5

20.4

12.9

22.8

9.1

24.0

11.6

30.1

14.0

19.7

15.6

29.3

17.1

24.7

19.8

28.2

22.8

18.015.8

23.6

23.0

11.2

22.8

14.5

13.011.1

14.7

5.3

13.48.8

30.2

19.0

20.830.6

16.4

12.114.2

18.4

12.815.0

35.6

26.1

21.0

13.9

23.8

10.2

25.6

13.4

32.2

16.7

22.6

18.6

34.3

22.230.4

26.336.3

31.1

28.6

27.6

38.2

40.5

31.6

2012 2008


Change in child poverty by change in the GDP

Australia

AustriaBelgium

Bulgaria

Canada

Chile

Croatia

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Iceland

Ireland

Israel

Italy

JapanKorea

Latvia

Lithuania

Luxembourg

Malta

Mexico

Netherlands

New Zealand

Norway

Poland

Portugal

Romania

Slovak Republic

Slovenia

Spain

Sweden

Switzerland

Turkey

United KingdomUnited States

-10

010

20C

hag

ne in

chi

ld p

ove

rty

.8 .9 1 1.1 1.2GDP ratio (2012/2007)

On average, countries that saw a larger drop in the GDP experienced a greater increase in child poverty.


European Union: Change in the poverty gap by change in the poverty rate

AustriaBelgium

Bulgaria

Canada

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Iceland

Ireland

ItalyLatvia

Lithuania

Luxembourg

Malta

Netherlands

Norway

Poland

Portugal

Romania

Slovak Republic

Slovenia

Spain

Sweden

Switzerland

United Kingdom

-10

-50

510

cha

nge

in c

hild

po

vert

y ga

p

-10 0 10 20change in child poverty headcount

The depth of child poverty increased in many European countries.Even in some countries where the rate of child poverty has fallen.


Child poverty increased in 19 countries; elderly poverty increased in 6 countries

Child poverty increased faster (or fell more slowly) among children under 18

than among the elderly (65 or over) in 28 of 31 European countries.


• Most affected– Croatia, Cyprus, Greece, Ireland, Italy, Portugal and Spain;

Estonia, Hungary, Iceland, Iceland, Latvia and Lithuania.

• Moderately affected– Austria, Belgium, Canada, Finland, France, Germany, Israel,

Japan, Malta, the Netherlands, New Zealand, Romania, Slovakia, Slovenia, the UK, the US

• Least affected– Australia, Bulgaria, Chile, Czech Republic, Denmark,

Luxembourg, Mexico, Norway, Poland, Republic of Korea, Sweden, Switzerland and Turkey

European Union: trends in children’s living conditions

Median income in households with children

Children in jobless households


Trends in children’s living conditions deteriorated in countries most affected by the crisis

Difficulty making ends meet

Difficult to live on householdincome


European Union: severe child material deprivation

Poland

German

y

Switz

erlan

d

Austria

Portuga

l

Romania

Slova

kia

Norway

Finlan

d

Swed

en

Czech Rep

ublic

France

Slove

nia

Luxe

mbourg

Netherl

ands

Denmark

Belgium

Spain

Icelan

d

Estonia

Lithuan

ia

Irelan

d

Bulgaria

United Kingd

omMalt

aIta

lyLat

via

Cypru

s

Greece

Hungary

-10

0

10

20

30

40

50

2008 2012 change (2008-2012)

• Largest absolute increases in Greece and Hungary.• Largest relative increases in Greece and Iceland.• Overall, the net increase in children living in SMD: 1.6 mln

In two-thirds of European countries the severe child deprivation rate has increased.

League Table 1: Key findings

• Between 2008 and 2012, child poverty increased in 23 of 41 rich countries.– The net increase in the number of poor children: 2.6 million.– On average, countries that saw a larger drop in the GDP experienced a greater increase in child poverty.

• The depth of child poverty increased in many European countries.– Even in some countries where the rate of child poverty has fallen. – In general, there is a positive correlation between the child poverty gap and the child poverty rate.

• Child poverty increased faster (or fell more slowly) among children under 18 than among the elderly (65 or over) in 28 of 31 European countries.

• In many European countries, poverty increased faster for children in migrant families than for other children.

• In two-thirds of European countries the severe child deprivation rate has increased.



League Table 2: Change in the NEET rate among 15-24-year-olds

Rank Countrychange (2008-2013)

1 Turkey -11.52 Germany -2.13 Japan -1.54 Luxembourg -1.25 Mexico -0.46 Sweden -0.37 Austria 0.07 Canada 0.09 New Zealand 0.810 Switzerland 0.811 Israel 0.912 France 1.012 Iceland 1.014 Ireland 1.214 Latvia 1.214 Republic of Korea 1.214 United Kingdom 1.218 Chile 1.518 Finland 1.518 Norway 1.521 Denmark 1.721 Malta 1.721 Netherlands 1.724 Australia 2.325 Lithuania 2.326 Czech Republic 2.427 Belgium 2.627 Estonia 2.627 Slovakia 2.630 Slovenia 2.731 United States 3.032 Poland 3.233 Hungary 3.933 Portugal 3.935 Bulgaria 4.236 Spain 4.337 Italy 5.637 Romania 5.639 Croatia 8.540 Greece 8.941 Cyprus 9.0

37.0

8.4

8.5

6.2

21.5

7.8

7.1

9.6

12.9

6.3

29.8

10.2

4.5

14.9

11.8

14.6

12.1

19.0

7.8

4.1

4.3

8.3

3.4

9.9

8.8

6.7

10.1

8.7

11.1

6.5

12.0

9.0

11.5

10.3

17.4

14.3

16.6

11.6

10.1

11.7

9.7

25.5

6.3

6.9

5.0

21.1

7.5

7.1

9.6

13.7

7.1

30.7

11.2

5.5

16.1

13.0

15.8

13.3

20.5

9.3

5.6

6.0

10.0

5.1

12.2

11.1

9.1

12.7

11.3

13.7

9.2

15.0

12.2

15.4

14.2

21.6

18.6

22.2

17.2

18.6

20.6

18.7

2013 2008

• Largest relative increase in NEET:• Cyprus (+93%)• Croatia (+84%)• Greece (+76%)

• Highest level of NEET in 2013:• Turkey (25.5%)• Italy (22.2%)• Bulgaria (21.6%)• Note: Israel’s NEET rates are not

internationally comparable

• Largest net increase in the number of NEETs:• United States (+1.4 million)• Italy (+0.3 million)• Mexico (+0.2 million)

• Between 2008 and 2012, the NEET rate (15-24) increased in 33 of 41 rich countries.

• In most of these countries, it was due to an increase in unemployment rather than inactivity.

• The youth unemployment rate (15-24) increased in 34 of 41 countries.• In Greece and Spain, more than 50% of economically active young people were out of

work in 2013.

• In countries most exposed to the recession, the rates of under-employment and long-term unemployment have tripled.




Change in the NEET rate by change in the GDP ratio (2008-2013)

0.75 0.8 0.85 0.9 0.95 1 1.05 1.1 1.15 1.2-2

0

2

4

6

8

10

USA

Italy

Mexico

Spain

Korea

Australia

Greece

UK

Poland

France

Chile

Romania

Belgium

Netherlands

Croatia

HungaryPortugal

Israel

Czech Republic

Cyprus

DenmarkNorwayFinland

SwitzerlandNew Zealand

SlovakiaSlovenia

Canada

LithuaniaEstonia

Malta

IcelandIreland

Bulgaria


Change in the NEET rate between 2008 and 2013: unemployment and inactivity, 15-24

TurkeyLa

tvia

Slovakia

Japan

Mexico

Lithuania

Germany

Spain

Canada

Ireland

United Kingdom

Austria

Sweden

Switzerla

nd

New Zealand

Poland

Iceland

Czech

Republic

Cyprus

Estonia

Greece

France

Bulgaria

Netherlands

Malta

Portugal

Slovenia

Finland

Norway

Australia

United States

Luxe

mbourg

Belgium

HungaryIta

ly

Denmark

Croatia

Romania-15

-10

-5

0

5

10

15

change (2008-2013) unemployed change (2008-2013) inactive


Change in youth unemployment (15-24), 2008-2013

Chile

German

y

Luxe

mbourgIsr

ael

Turke

yJap

an

Republic

of Korea

AustriaMalt

a

Switz

erlan

d

Norway

Mexico

Canad

a

Icelan

d

United St

ates

Swed

en

Australi

a

Finlan

d

New Ze

aland

Romania

Denmark

France

United Kingd

om

Belgium

Netherl

ands

Estonia

Hungary

Lithuan

ia

Czech Rep

ublicLat

via

Poland

Slove

nia

Irelan

d

Slova

kia

Bulgaria Ita

ly

Portuga

l

Croati

a

Cypru

sSp

ain

Greece

-10

0

10

20

30

40

50

60

70

2008 2013 change (2008-2013)


Change in youth unemployment by change in the GDP

AUAT

BE

BG

CA

CL

HRCY

CZ

DKEE

FIFR

DE

GR

HU

IS

IE

IL

IT

JP

LV LT

LU

MTMX

NLNZ

NO

PL

PT

KR

RO

SK

SI

ES

SECH

TK

UK

US

-10

010

2030

40ch

ang

e in

the

une

mpl

oym

ent r

ate

(15

-24

)

.8 .9 1 1.1 1.2GDP ratio (2013/2008)

r=0.66; p<0.001


Change in youth (15-24) unemployment vs change in prime-age (25-54) unemployment

Luxe

mbourgIsr

aelChile

Turkey

Germany

Japan

Iceland

Austria

Republic of K

orea

Switzerla

nd

Mexico

Norway

Malta

United States

Canada

Denmark

Sweden

Finland

Netherlands

Australia

New Zealand

Lithuania

France

Estonia

Romania

United Kingdom

Belgium

Hungary

Slovenia

Latvi

a

Czech

Republic

Poland

Ireland

Bulgaria

Slovak R

epublic

Portugal

Italy

GreeceSpain

Cyprus

Croatia-10

-5

0

5

10

15

20

25

30

35

40

15-24 (2008-2013) 25-54 (2008-2013) Difference in differences


League Table 3: How people say their lives have changedCountries ranked based on change 2013-2007

Direction of change

Recent Impact

CountryNot having enough money to buy food you and your

family needed?

Experienced stress yesterday?*

Satisfaction with life today

Children in this country have

opportunity to learn and grow?

No. of indicators worsening 2013-07

! = >2 indicators worsened 2013-11

Germany 4 9 3 6 0 Switzerland 3 12 8 11 1 Israel 4 29 6 2 1 !Slovak Republic 26 13 3 4 2 Chile 1 32 1 14 1 Iceland 18 16 3 11 2 Australia 13 6 15 15 1 Austria 4 16 8 21 2 Japan 8 7 27 8 1 Bulgaria 1 n.a. 11 29 1 Latvia 28 15 7 5 2 Sweden 4 11 10 34 2 Denmark 8 9 28 15 1 Mexico 23 8 2 28 2 Lithuania 29 4 28 1 2 Republic of Korea 32 2 12 17 1 !Norway 16 21 15 11 2 Czech Republic 8 25 12 19 1 France 26 5 15 19 1 Malta 20 25 15 8 2 Poland 18 20 28 3 3 United Kingdom 8 25 15 21 2 !Belgium 13 18 24 17 3 Italy 13 21 36 8 3 Luxembourg 16 25 15 26 3 !New Zealand 23 1 31 31 3 Canada 8 32 15 34 2 Hungary 41 18 24 6 3 Estonia 35 13 15 36 3 !Croatia 29 n.a. 15 33 2 Netherlands 29 30 24 21 4 !Romania 32 3 33 37 3 Slovenia 20 34 12 39 3 Finland 20 34 31 21 4 United States 37 21 33 21 4 !Portugal 35 21 35 31 4 !Spain 23 30 40 38 4 !Ireland 32 36 38 30 4 !Turkey 40 38 37 27 4 !Cyprus 38 37 38 40 4 !Greece 39 39 41 41 4 !

• The recession affected subjective perceptions of the quality of life. – Feelings of insecurity– Stress– Satisfaction with life– Opportunity for children to learn and grow

• In 18 of 41 rich countries, at least three indicators worsened between 2007 and 2013.

• The most affected countries are at the bottom of the league table.



…even during periods of economic growth in the past social spending has been in decline

GDP and total expenditure Social protection spending, share of total spending (blue line, left axis) and family- and child-related spending, share of total social protection spending (blue bars, right axis).

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

80

90

100

110

120

130

140

150

160

Total expenditure index GDP index

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0.33

0.34

0.35

0.36

0.37

0.38

0.39

0.036

0.038

0.04

0.042

0.044

0.046

0.048

share of family and child spending share of social protection spending


Change in the effectiveness of social transfers in reducing child poverty

Czech RepublicSwedenSlovakiaNorwayHungary

PolandFranceAustria

Germany RomaniaBelgium

MaltaFinland

ItalyBulgariaSlovenia

SwitzerlandDenmark

NetherlandsCyprus

GreecePortugal

SpainLatvia

EstoniaUnited Kingdom

IrelandLuxembourg

IcelandLithuania

-6 -4 -2 0 2 4 6 8 10

Child poverty reduction 2008 - 2010

HungaryLithuania

EstoniaFranceLatvia

IcelandSweden

SwitzerlandGreece

SloveniaPortugal

ItalySlovakia

CyprusSpain

IrelandNetherlandsLuxembourg

BulgariaGermany RomaniaDenmark

NorwayAustria

Czech RepublicPoland

FinlandMalta

BelgiumUnited Kingdom

-7 -6 -5 -4 -3 -2 -1 0 1 2 3

Child poverty reduction 2010-2012


Selected recent significant changes to family benefits

• Bulgaria increased child benefits and child-care leave benefits in 2013–2014.

• Latvia eased conditions for childcare benefits in 2014, after scaling back the parental leave benefit in 2010.

• Poland introduced modest but positive reforms in family transfers, tax breaks and parental leave in 2012–2013.

• Malta implemented a comprehensive universal childcare plan in 2014.

• Greece made a disparate system of child-related allowances into a less restrictive, more generous single benefit in 2013.

• In Spain, unemployment benefits have been tightened, child-care benefits reduced and universal birth benefits eliminated. The share of the social protection budget spent on families and children declined from 5 per cent to 3.5 per cent between 2008 and 2011.

• Ireland cut child benefits several times from 2010 to 2014, while squeezing unemployment benefits and social assistance. On a positive note, tax reform in 2011 reduced deductions for lone parents and disabled children, and in 2014 initiatives were announced to improve health coverage for children under six and to reinforce school breakfast programmes.

• Since 2010, the United Kingdom has implemented a series of cuts that have reduced the real value and coverage of child benefits and tax credits for families with children. In 2013, a cap was imposed on the total benefits a household can receive, mainly affecting a small number of large families with high housing costs, while housing benefits were cut (the so-called ‘bedroom tax’), affecting large numbers of social tenants. One positive note: childcare provisions for two-year-olds have been expanded.


Inventory of Recent Significant Policy Changes for Programs affecting Families and Children

• Identified rule changes in over 60 programs across 39 countries since 2010/2011– Child and family benefits, tax credits for families with

children, parental leave, child care• Eligibility criteria were made stricter in 25 programs and

more generous in 17 programs• Benefit levels decreased in 16 programs and increased in 29

programs• Suggests a trend towards more targeted and narrowly focused

family and child policies– Restricting the number of people but maintaining or slightly increasing

the benefit levels

• Make an explicit commitment to end child poverty in developed countries.– Prioritize the well-being of children in responses to the recession.

• Rescue, prevent, and give hope.– Eliminate extreme levels of poverty.– Increase investment in social protection policies. – Smooth the transition from school to work.

• Produce better data for informed public debate.– Improve the availability, timelines and usefulness of information on child well-being.


Recommendations


Bibliography

Martorano, B. The Australian Household Stimulus package: Lessons from the recent economic crisis

Martorano, B.Is it Possible to Adjust 'With a Human Face'? Differences in Fiscal Consolidation Strategies between Hungary and Iceland

Martorano, B.The Consequences of the Recent Economic Crisis and Government Reactions for Children

Chzhen, Y.Child Poverty and Material Deprivation in the European Union during the Great Recession

Kokkevi, A., M. Stavrou, E. Kanavou and A. FotiouThe Repercussions of the Economic Recession in Greece on Adolescents and their Families

Chzhen, Y.Subjective Impact of the Economic Crisis on Households with Children in 17 European Countries

Natali, L., B. Martorano, S. Handa, G. Holmqvist and Y. ChzhenTrends in Child Welfare in EU Countries during the Great Recession: A cross-country comparative perspective

Bitler, M., H. Hoynes and E. KukaChild Poverty and the Great Recession in the United States

Chzhen, Y. and D. RichardsonYoung People (not) in the Labour Market in Rich Countries during the Great Recession

Holmqvist, G. and L. NataliExploring the Late Impact of the Financial Crisis using Gallup World Poll Data: A note

Martorano, B.Pre-crisis Conditions and Government Policy Responses: Chile and Mexico during the Great Recession

L. Natali, Handa, S., Chzhen, Y., Martorano, B., Bitler, M., Hoynes, H. and E. KukaChanges in child poverty in the OECD during the Great Recession - An initial view

http://www.unicef-irc.org/publications/697
















Thank you!

• LT1– Change in the anchored child poverty rate (2008-2012)

• 2008: 60% of median equivalent household income after taxes and transfers

• 2012: base year poverty line adjusted for consumer price inflation

• LT2– Change in the 15-24 NEET rate (2008-2013)

• Data from labor force surveys

• LT3– Average rank of changes in four subjective “quality of life”

indicators (2007/2008-2013)• Data from the Gallup World Poll


League Tables: Methodology

2008 20110

5000

10000

15000

20000

25000

30000

35000

Median income

Poverty line (60%)

Child RELATIVE poverty

LEVEL

CHANGE 2008-2011

2008 2011 Difference

UK 23.9 18.6 ↓ -5.3

Child ANCHORED poverty

LEVEL

CHANGE 2008-2011


UK 23.9 25.7 ↑ 1.8

0.0

000

2.0

000

4.0

000

6D

ensi

ty

10000 20000 30000 40000 50000Disposable income (at 2008 prices)

2008 density function

United Kingdom - Density function (relative)0

.00

002

.00

004

.00

006

Den

sity


2008 density function 2011 density function


.00

002

.00

004

.00

006

Den

sity




.00

002

.00

004

.00

006

Den

sity




.00

002

.00

004

.00

006

Den

sity



United Kingdom - Density function (relative)

Country Median 2008 Median 2011 at 2008 pricesUnited Kingdom 18938.05 16974.4

Poverty line 2008 Poverty line 2011at 2008 prices

11362.83 10184.64

0.0

000

5.0

001

.00

015

.00

02.0

002

5D

ensi

ty

2000 4000 6000 8000 10000 12000Disposable income (at 2008 prices)


Slovakia - Density function (relative)

Child RELATIVE poverty

LEVEL CHANGE 2008-2011


SK 16.7 21.3 ↑ 4.6

Country Median 2008 Median 2011 Poverty line 2008 Poverty line 2011 at 2008 prices at 2008 pricesSlovakia 4797.083 6044.471 2878.25 3626.682

Child ANCHORED poverty

LEVEL CHANGE 2008-2011

Difference

SK 16.7 11.9 ↓ -4.8


Conceptual framework: How did the financial crisis turn into a crisis for children?

Policies to contain the negative

consequences of the macroeconomic shock

Monetary policy was accommodating but inadequate. Many countries depreciated their national currencies to counter the drop in international demand.

Fiscal policy was the only tool available to policymakers in most cases (e.g. Eurozone).

Governments also implemented active and passive labour market policies.

Transmission channels

Labour market: Reduced demand – fewer jobs – drop in household income.

Financial market: Deterioration of assets and restricted access to credit.

Public sector: Public finances deteriorated prompting aggressive austerity programmes, higher taxes and/or lower spending on public services.

Household impact

Direct impact on children and youth Material deprivation Mental health Nutrition/food security Protection Human capital investment Employment opportunities

Global financial crisis, sovereign debt, economic crisis The crisis started in the financial sector affecting banking and housing in developed countries. It quickly evolved into an economic crisis taking the form of a sovereign debt crisis in some European countries.

Reduced income due to unemployment, increased taxes and reduced transfers Family asset depletion Deterioration in access to and quality of services

Reduced consumption Stress and domestic violence Lack of nurture and care Social exclusion

Social protection system responses:

Automatic stabilizers – unemployment insurance and minimum income

Discretionary policies:

early – cash payments

later – cuts in public spending

Children of the Recession The impact of the economic crisis on the well-being of children in rich...

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