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UNICEF Innocenti's complete catalogue of international peer reviewed journals

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Unemployment, social protection spending and child poverty in the European Union during the Great Recession

AUTHOR(S)
Yekaterina Chzhen

Published: 2016
The 2008 financial crisis triggered the first contraction of the world economy in the post-war era. This article investigates the effect of the Great Recession on child poverty across the EU-27 plus Iceland, Norway and Switzerland and studies the extent to which social protection spending may have softened the negative impact of the economic crisis on children. While the risks of child poverty are substantially higher in countries with higher rates of working-age unemployment, suggesting a significant impact of the Great Recession on household incomes via the labour market, the study finds evidence for social protection spending cushioning the blow of the crisis at least to some extent. Children were significantly less likely to be poor in countries with higher levels of social protection spending in 2008–2013, even after controlling for the socio-demographic structure of the population, per capita gross domestic product (GDP) and the working-age unemployment rate. The poverty-dampening contextual effect of social spending was greater for the poverty risks of children in very low work intensity families and large families. The study uses two complementary thresholds of income poverty, both based on 60 percent of the national median: a relative poverty line and a threshold anchored in 2008. Although the choice of a poverty line makes a difference to aggregate child poverty rates, individual-level risks of a child being poor associated with a range of household-level characteristics are similar for the two poverty lines.
Perceptions of the Economic Crisis in Europe: Do Adults in Households with Children Feel a Greater Impact?

AUTHOR(S)
Yekaterina Chzhen

Published: 2016
More than 5 years since the outbreak of the global financial crisis, a flurry of evidence is emerging on the effects of the ensuing economic downturn on unemployment and poverty rates in rich countries, but less is known about cross-country differences in subjective assessments of the crisis and whether adults in households with children were affected to a greater extent. This paper investigates differences in the perceived impact of the economic crisis between adults in households with and without children in 17 European countries, using data from the Life in Transition Survey 2010 in a multilevel modelling framework. It also explores differences in the coping strategies that households adopted to deal with the decline in income or economic activity. Everything else being equal, perceptions of the crisis were more widespread in countries with higher rates of child poverty, lower economic growth and lower GDP per capita. Across countries, perceptions of the crisis closely trailed subjective indicators of financial difficulties from other international surveys conducted in 2010. Adults in households with children were more likely to report an impact of the crisis, with larger differences in countries with higher rates of monetary child poverty. Adults in households with children also adopted a greater variety of coping strategies than the rest, prioritizing expenditure on basic necessities, while cutting back on luxuries and holidays. Nevertheless, many still reported reduced consumption of staple foods as a result of economic difficulties.
The outcomes of the crisis for pensioners and children

AUTHOR(S)
Jonathan Bradshaw, Yekaterina Chzhen

Published: 2015

When the final review is written on the impact of the global financial crisis that began in 2007 it will conclude that the main beneficiaries were pensioners and the main victims have been children. That final review is still some way off: economic growth is still tentative; most European Union countries are mired in deficit; austerity (or in the words preferred by the European Commission “fiscal consolidation”) rules. We are not the first to point to this phenomenon.

A study of the short-term impact of the Great Recession (up to 2011) on household incomes by Jenkins et al (2013) using six country case studies (Germany, Ireland, Italy, Sweden, the UK and the USA) found greater increases or slower declines in poverty among children than among the elderly. Hills et al. (2014) analysed the distributional impact of tax and benefit reforms over the period 2001-2011 in seven diverse EU countries: (Hills et al., 2014). The study showed that, on the whole, policy changes tended to be more favourable to pensioners than children.

But it is worth pointing out that very little attention has been paid to this evident unfairness. Analysts of social policy seem reluctant to trade the interest of children against the interest of pensioners. After all, they might argue, both groups are vulnerable and may take the view that more important than horizontal equity is vertical equity – inequality has also been increasing. Even NGOs with interests in children and child poverty seem reluctant to draw the contrast. An honourable exception was the UNICEF (2014) Innocenti Report Card 12 which compared changes in the under 18 and 65-plus anchored poverty rates 2008-2012 and found that the difference in difference had moved in favour of pensioners in every country of the EU except Poland, Switzerland and Germany. We shall repeat and update that analysis. It is particularly surprising that the European Commission has not paid more attention to this trend given its emphasis on social investment. Protecting pensioners more than children seems the reverse of what one might expect from a social investment strategy, especially given the proven costs of child poverty (Hirsch 2014).

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