Inequality, poverty, social exclusion and policy

John HillsESRC Research Centre for Analysis of

Social Exclusion

International Centre for Health and Society23 October 2002

• 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?

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”

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

Concepts of Social Exclusion

Narrow focus Wider 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

‘……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)

‘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)

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.

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

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

Indicators of social exclusionDimension Indicator and threshold

Consumption Equivalized household net income is under half mean income

Production Not 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 engagement Did not vote in general election and not a member of a campaigning organization (political party, trade union, parents association, or tenants/residents association)

Social interaction In 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)

Exclusion at a point in time, by year and by dimension

(% of working-age population)

Year Consumption Production Political

Engagement

Social

Interaction

1991 16 13 n/a 12

1992 17 14 17 n/a

1993 17 14 n/a 10

1994 17 14 n/a n/a

1995 15 13 n/a 9

1996 15 13 n/a n/a

1997 16 12 21 9

1998 n/a 12 n/a n/a

Source: Burchardt et al (2002)

Exclusion on multiple dimensions, Wave 7 of BHPS

Number of dimensions

on which excluded

Percentage of working age population

0 57.5

1 30.1

2 10.0

3 2.3

4 0.1

0-4 100

Source: Burchardt et al (2002)

Low income and exclusion on different dimensions, wave 7 (%)

Income quintile

Group

Production Political engagement

Social interaction

Bottom 46 28 28

2nd 24 23 21

3rd 15 18 19

4th 9 17 17

Top 6 14 16

All 100 100 100

Source: Burchardt et al (2002)

Exclusion over time on multiple dimensions, by Wave 8

0

5

10

15

20

25

30

35

40

0 3 6 9 12 15 18 21

No. of waves times no. of dimensions excluded

Pe

rce

nta

ge

of w

ork

ing

-ag

e p

op

ula

tion

Source: Burchardt et al (2002)

Short-term income mobility

Quintile group in 1991/1992

Quintile group in 1993/1994

Bottom 2 3 4 Top

Bottom 64 22 10 3 1

2 24 48 20 5 2

3 9 22 46 19 5

4 2 5 20 53 20

Top 0 3 4 19 74

Source: Jarvis and Jenkins (1998); BHPS

Longer-term income mobilityQuintile group in 1991

Bottom 2 3 4 Top

Quintile group in 2000

Bottom 45 24 15 9 7

2 24 32 23 14 8

3 15 20 27 24 14

4 10 15 20 30 25

Top 6 9 14 24 46

Source: DWP (2002); BHPS

Intergenerational Earnings mobility:

  Father’s earnings quartile

Son’s earningsQuartile 1958 cohort

Bottom 2 3 Top

Bottom 30 29 25 17

2 28 25 26 20

3 23 24 25 29

Top 19 22 24 34

1970 cohort        

Bottom 38 30 19 13

2 25 29 29 16

3 22 22 27 28

Top 15 19 25 43

Source: Blanden et al (2002)

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

Poor High income

Low income

Poor

Bottom 17 22 28 13 26 30

2nd 19 21 22 16 23 25

3rd 20 19 18 20 20 17

4th 21 19 17 24 16 16

5th 22 18 15 26 14 12

All 100 100 100 100 100 100

Source: McKnight (2002)

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.

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),

Adult negative outcomes showing largest odds ratio for each childhood variable (women)

Child factor Outcome Odds ratio

Clear poverty No qualifications 2.6

Clear contact with police No qualifications 3.7

Low Test scores No qualifications

Teenage Mother

Social Housing

26.8

3.7

2.7

Low Father’s interest in school

No qualifications 3.7

Low Mother’s interest in school

No qualifications 2.5

Born out-of-wedlock Extra-Marital Birth 2.5

Ever in care Extra-Marital Birth 3.7

Divorce 3+ Partners 2.3

Source: Hobcraft (2002); NCDS

Figure 5.5: Early Motherhood and Childhood Poverty

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50

Living in SocialHousing

Claiming Benefits

No Qualifications

Low HouseholdIncome

No Telephone

High Malaise

Ad

ult

Ou

tco

mes

Odds of experiencing

TeenageMother, NoChildhoodPovertyFirst BirthBefore 23, NoChildhoodPovertyClear ChildhoodPoverty, FirstBirth 23-32

SomeChildhoodPoverty, FirstBirth 23-32Linear (NoChildhoodPoverty, FirstBirth 23-32)

Source: Hobcraft and Kiernan (1999)

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

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?

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

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

Four forms of intervention

Intervention to change:

Focus of intervention:

Risk of event Effects of event

Entry to adverse state

Prevention Protection

Exit from adverse state

Promotion Propulsion

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…..?

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

• 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?

Real increases in benefits, April 1997 to April 2003April

97

April

03

Real increase (%)

Child element of child tax credit

- Under 11

- 11-16

12.05

19.95

27.75

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)

71.75 150.75 84

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

Five Labour Budgets: proportional changes in income

0

5

10

15

20

25

30

1 2 3 4 5 6 7 8 9 10

All

With children

Withpensioners

Source: Microsimulation Unit, Cambridge University

% increase in income

Income group (tenths of individuals)

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 (%)

19.4 41.9 21.5 25.9

Poverty rate with tax and benefit changes (%)

14.0 18.8 15.0 15.8

Source: Sutherland (2001)

Note: Poverty line is 60% of median equivalent income before housing costs. Figure shows first round impact effects only.

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

Source: IFS

Impact of Labour Budgets 1997-2000 compared to

income indexation of tax/benefit system

Gain / loss (% of income) compared to 1997 system(price-linked)

-2

0

2

4

6

8

Bottom 2 3 4 5 6 7 8 9 Top

Tenths of households by equivalent income

Labour policies

Income-linked from 1997

Source: Sutherland (2000); Hills (2000)

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