Poverty dynamics, family background and attainment: BHPS evidence

1. Poverty dynamics, family background and attainment: BHPS evidence Stephen P. Jenkins (Institute for Social and Economic Research, University of Essex) ESRC Research Methods Festival, Oxford, 19 July 2006

2. British Household Panel Survey (BHPS) • Representative sample of GB private household population in 1991 • First wave of interviews in Autumn 1991  c. 5,500 households with c. 10,000 adult respondents, plus children • Original sample members followed and re-interviewed annually thereafter • New sample members: • children turning 16 • others joining panel households (e.g. by marriage) • Retrospective work, job and partnership histories covering pre-panel period • Youth self-completion questionnaire (11–15 year olds) • the ‘British Youth Panel’, 1994– • Extension samples • Scotland and Wales, 1999 (1,500 households each) • Northern Ireland, 2001 (2000 households)

3. The BHPS provides both short- and long-term perspectives on life course dynamics • Short-term (using data from the annual interviews): • Example 1: describing and modelling how incomes change from one year to the next, especially movements in and out of low income • Long-term/intergenerational (combine annual interview data from the main panel survey with retrospective history data for parents covering pre-panel years) • Example 2: how various dimensions of family background during a respondent’s childhood are related to outcomes later in the respondent’s life Policy relevance: the outputs discussed in the two examples have been widely used and cited by research users in government and elsewhere

4. Short-term perspectives from the BHPSExample 1: poverty dynamics

5. Cross-sectional stability hideslongitudinal flux • Lots of short-distance mobility; little long-distance mobility • Substantial turnover in the low income population • … or is it just measurement error or transitory variation? Low income threshold

6. Income mobility (2-year averaged incomes) Transition matrix (row percentages) • 50% of those with income below half 1991 average moved out • 25% of those with income above half 1991 average moved in • 51% of sample remained in same income group; 92% remained in same or adjoining income group • Lots of short-distance mobility; little long-distance mobility, a.k.a. the “rubber band” model of income dynamics

7. Major approaches to examining the ‘causes’ of poverty dynamics(all have been applied to BHPS: see reference list at end) • Trigger event classifications of poverty entries and exits • According to whether poverty transitions associated with different types of income event or demographic event: • Hierarchical classifications • Non-hierarchical classifications • E.g. Jenkins & Rigg (2001) • Multivariate regression models • Hazard regression models • Markovian transition probability models (variant of 1) • Variance component models • ‘Structural’ models • E.g. Jenkins & Rigg (2001), Devicienti (2001), Cappellari & Jenkins (2004), Aassve et al. (2005)

8. Trigger events and poverty exits/entries • Both income events and demographic events are important • Demographic events more important for entries • Earnings changes very important – not only the head’s, but also those of others in household • Importance varies by household type (not shown)

9. The importance of repeat poverty spells Only by taking account of repeat poverty spells, does one get good estimates of the total time spent poor over a period

10. Mean number of years poor out of eight for a cohort of poverty entrants, by household type (mixture hazard regression model estimates) • Substantial heterogeneity • in experience of poverty • over time • More time spent poor is associated with: • having more kids • not working • being a lone parent • being elderly

11. Policy implications • Importance of labour market as a route out of poverty for those of working age • Policy based around labour market insufficient for all vulnerable groups (e.g. elderly, sick, disabled, carers) • Important to see individuals in terms of their household context (affects number of income-bringers, and needs) • Spell repetition (and decline in re-entry rates with time non-poor) remind us of the importance of measures preventing entries into poverty (not just helping exits) – ‘real’ jobs and job retention, not just promoting moves into employment • Exit rates fall with time poor  identify potential long stayers early and target them

12. Intergenerational perspectives from the BHPSExample 2: the effects of family background during childhood on later-life outcomes

13. Effect of childhood poverty on young adults’ outcomes • No effects for some • outcomes (blanks), • but • some large effects • Variation of effects by: • outcome • sex of young adult • childhood stage when • poverty experienced

14. Effect of living in a lone parent family during childhood on young adults’ outcomes • Experience of life in lone parent family usually associated with • disadvantageous outcome • Most of unfavourable effect linked to when kid aged 0–5 • For most outcomes, adverse effect persists when control for • economic conditions of family (model 2)

15. Effect of living in a lone parent family during childhood on young adults’ outcomes: Britain versus Germany

16. Policy implications • Both poverty and family structure during childhood appear to have effects on selected later-life outcomes in Britain (though not necessarily in Germany) • Why poverty has these effects not yet clear  e.g. is it what money buys, or is money a proxy for other things? • You need to be careful when drawing conclusions • Example: Ermisch and Francesconi (JRF, 2000) found that kids with mothers who worked full-time during childhood were later disadvantaged in some respects. Different readers drew different conclusions from same ‘fact’ ! • ‘mothers should stay at home’? • ‘what about more input from fathers’? • ‘increase availability of quality child care facilities’?

17. Data sources BHPS data are available from the UK Data Archive : http://www.data-archive.ac.uk/findingData/bhpsTitles.asp • Main release data for waves 114 (survey years 19912004) • Derived ‘net income’ variables to accompany the BHPS (Jenkins et al. data)

18. Selected references Poverty dynamics Aassve, A., Burgess, S., Dickson, M. and Propper, C. (2005). ‘Modelling poverty by not modelling poverty: an application of a simultaneous hazards approach to the UK’, ISER Working Paper 2005-26, University of Essex, Colchester. http://www.iser.essex.ac.uk/pubs/workpaps/pdf/2005-26.pdf Cappellari, L. and Jenkins, S.P. (2004). ‘Modelling low income transitions’, Journal of Applied Econometrics, 19, 593–610. Devicienti, F. (2001). ‘Estimating poverty persistence in Britain’, LABORatorio Riccardo Revelli (Centre for Employment Studies), Working Paper 1, Torino. http://www.labor-torino.it/workingpapers/wp1.htm Jenkins, S.P. (2000). ‘Modelling household income dynamics’, Journal of Population Economics, 13, 529–567. Jenkins, S.P. and Rigg, J.A. (2001). The Dynamics of Poverty in Britain, DWP Research Report No. 157. Corporate Document Services, Leeds. http://www.dwp.gov.uk/asd/asd5/rrep157.asp Intergenerational transmission Ermisch, J.F. and Francesconi, M. (2001a). ‘Family structure and children’s achievements’, Journal of Population Economics 14, 249–70. Ermisch, J.F. and Francesconi, M. (2001b). ‘Family matters: impacts of family background on educational attainments’. Economica 68, 1372–56. Ermisch, J.F., Francesconi, M., and Pevalin, D.J. (2001). Outcomes for Children of Poverty, Department for Work and Pensions Research Report No. 158. Corporate Document Services, Leeds. http://www.dwp.gov.uk/asd/asd5/rrep158.asp Ermisch, J., Francesconi, M., and Pevalin, D.J. (2004). ‘Parental partnership and joblessness in childhood and their influence on young people’s outcomes’, Journal of the Royal Statistical Society A, 167(1): 69–101. Francesconi, M., Jenkins, S.P., and Siedler, T. (2005) The Impact of Family Structure during Childhood on Later-Life Attainment, Anglo-German Foundation, London. http://www.agf.org.uk/pubs/pdfs/1414web.pdf