Children of austerity : impact of the Great Recession on child poverty in rich countries

The 2008 financial crisis triggered the worst global recession since the Great Depression. Many OECD countries responded to the crisis by reducing social spending. Through 11 diverse country case studies (Belgium, Germany, Greece, Hungary, Ireland, Italy, Japan, Spain, Sweden, United Kingdom, and the United States), this volume describes the evolution of child poverty and material well-being during the crisis, and links these outcomes with the responses by governments. The analysis underlines that countries with fragmented social protection systems were less able to protect the incomes of households with children at the time when unemployment soared. In contrast, countries with more comprehensive social protection cushioned the impact of the crisis on households with children, especially if they had implemented fiscal stimulus packages at the onset of the crisis. Although the macroeconomic 'shock' itself and the starting positions differed greatly across countries, while the responses by governments covered a very wide range of policy levers and varied with their circumstances, cuts in social spending and tax increases often played a major role in the impact that the crisis had on the living standards of families and children. Cover 1 Children of Austerity 4 Copyright 5 Contents 6 List of Figures 8 List of Tables 14 List of Contributors 16 1: Introduction: Scope and Methods 22 1.1. Introduction 22 1.2. Scope and Motivation of the Book 23 1.3. Case Studies 24 1.4. Summary and Conclusions 27 References 28 2: Impact of the Economic Crisis on Children in Rich Countries 29 2.1. Introduction 29 2.2. Nature of the Crisis and Recovery across Forty-one Countries 30 2.2.1. Macroeconomic Trends 30 2.2.2. Labour Market Trends 34 2.3. Children in Crisis 36 2.4. Social Spending 42 2.5. Conclusion 49 References 49 3: Belgium: Creeping Vulnerability of Children 51 3.1. Introduction 51 3.2. The `Great Recession ́ and its Aftermath 52 3.3. Child Poverty before, during and after the Crisis 55 3.3.1. Trends in Living Conditions of Children in Belgium 55 3.3.2. The Role of the Labour Market 59 3.3.3. Gauging the Impact of the Crisis 60 3.3.4. Sociodemographic Characteristics 62 3.3.5. Work Intensity and Sociodemographic Characteristics 63 3.4. Policies 66 3.4.1. Policies before the Crisis 66 3.4.2. Policies during the Crisis 67 3.4.3. Policy Discourse 69 3.4.4. The Way Forward 69 3.5. Conclusion 72 References 73 4: Child Poverty during the Recession in Germany 77 4.1. Introduction 77 4.2. The Impact of the Crisis 78 4.3. Child Poverty before, during, and after the Great Recession 83 4.3.1. Development of Inequality and Poverty 84 4.3.2. Children: Economic Well-being, Risks of Poverty, and Social Policy Impacts 88 4.3.3. Sociodemographic Characteristics of Children in Poverty 93 4.4. Policies and Debates 97 4.4.1. Difficult Integration into Work 99 4.4.2. Low Earnings 103 4.4.3. Inadequate Social Protection 105 4.4.4. Unequal Educational Opportunities 109 4.5. Summary and Conclusions 110 References 111 5: The Impact of the Great Recession on Child Poverty in Greece 115 5.1. Introduction 115 5.2. The Economic Crisis 116 5.2.1. The Boom Years 116 5.2.2. The Bailout 116 5.2.3. Record Fiscal Consolidation 117 5.2.4. A Low-performing Economy 117 5.2.5. The Failures of Austerity 118 5.2.6. Elusive Alternatives 119 5.2.7. Political Instability 120 5.2.8. Stagnation and Divergence 120 5.3. The Social Crisis 121 5.3.1. Jobs 121 5.3.2. Earnings 122 5.3.3. Income Distribution 123 5.3.4. Child Poverty 123 5.3.5. Access to Services 124 5.3.6. Healthcare 126 5.3.7. Education 126 5.3.8. Food Aid 127 5.4. Policy Responses 127 5.4.1. Greek Welfare prior to 2009 128 5.4.2. Social Protection under Austerity (2010-14) 129 5.4.2.1. Unemployment Benefits 129 5.4.2.2. Child Benefit 130 5.4.2.3. Social Dividend 131 5.4.2.4. Minimum Income Pilot 131 5.4.2.5. Retrenchment vs Expansion 133 5.4.3. Dealing with the `Humanitarian Crisis ́ (2015-) 133 5.4.4. Assessing the Poverty Impact 134 5.4.5. The Policy Discourse 134 5.5. Conclusions 135 References 136 6: Recession, Recovery, and Regime Change: Effects on Child Poverty in Hungary 139 6.1. Introduction 139 6.2. Hungary ́s Economic Crisis 140 6.2.1. Introduction: A Short Account of How Hungary Faced the Outbreak of the Crisis 140 6.2.2. Economic Developments in the Period 2007-2014 141 6.2.3. Institutional Legacy of Social and Family Policies 144 6.2.4. Policy Changes: General Social Policy and Family Policy Measures 145 6.2.4.1. The Political Context 145 6.2.4.2. Shift in Policy Regimes in the Making: From Austerity to Workfare 146 6.3. Children in Hungary ́s Crisis 148 6.3.1. Background and Underlying Structural Trends 148 6.3.2. Children in Crisis: Characteristics of Child Poverty and Trends over Time 151 6.4. An Analysis of the Impact of Policies on Children during the Crisis Times 159 6.4.1. The Poverty Reduction Effect of Cash Benefits 159 6.4.2. Change of Incidence of Social Transfers over Time 162 6.5. Conclusions and Implications 163 References 164 7: Children of the Celtic Tiger during the Economic Crisis: Ireland 167 7.1. Introduction 167 7.2. Ireland ́s Economic Crisis 168 7.3. Children in Ireland ́s Crisis 169 7.4. Policy and the Impact of the Crisis on Children 182 7.5. Conclusions and Implications 188 References 189 8: The Impact of the Great Recession on Child Poverty: The Case of Italy 191 8.1. Introduction 191 8.2. The Nature of the Crisis: Origins and Transmission Channels 192 8.3. Children in Crisis: Characteristics of Child Poverty and Trends over Time 193 8.3.1. Child Poverty in Italy before the Crisis 193 8.3.2. Trends and Drivers of Child Poverty since the Onset of the Crisis 195 8.4. Policies: Structural Features of the Policy Framework and Responses during the Crisis 201 8.4.1. The Social Safety Net before the Onset of the Crisis 201 8.4.2. Policy Responses throughout the Crisis at the General Level 203 8.4.3. Specific Policy Innovations Concerning Children ́s Poverty 205 8.5. Concluding Remarks 208 References 208 9: The Recession and the Policy Response for Child Poverty in Japan 212 9.1. Introduction 212 9.2. The Economic Crisis 213 9.2.1. Japan ́s Changing Labour Market before the Crisis 213 9.2.2. The Double Crisis of 2008 and 2011 216 9.3. How Children Fared 218 9.3.1. Change in the Relative and Anchored Poverty Rates and Material Deprivation 218 9.3.2. Material Deprivation 219 9.4. Mechanisms Explaining the Poverty Trends 220 9.4.1. Household and Child Characteristics 222 9.4.2. Child Poverty Rate by Household Structure 224 9.4.3. Work Intensity 224 9.4.4. Work Status (Seiki/Hiseiki) 229 9.5. Policy Response 231 9.5.1. The Change of Government in 2009 231 9.5.2. Reform of Child Benefit 232 9.5.2.1. Child Benefit 233 9.5.2.2. Tax Increase for Households with Children 233 9.5.3. Failure of the DPJ Government 235 9.6. Conclusion 236 References 238 10: Growing up in Poverty: Children and the Great Recession in Spain 240 10.1. Introduction 240 10.2. Nature of the Crisis 241 10.3. Spanish Children during the Crisis 244 10.3.1. Relative and Anchored Child Poverty Trends 244 10.3.2. Low Work Intensity and Poverty among Children 247 10.3.3. Material Deprivation Trends among Children 248 10.3.4. Children at Most Risk during the Great Recession 252 10.4. Policy Changes during the Economic Downturn and the Effectiveness of the Monetary Transfer System 255 10.5. Conclusions 260 References 261 11: Sweden: Child Poverty during Two Recessions 263 11.1. Introduction 263 11.2. The Nature of the Crises 264 11.3. Child Poverty across the Crises 265 11.3.1. Trends in Poverty among Families with Children 266 11.3.2. Trends in Child Poverty in Vulnerable Groups 270 11.3.3. The Importance of Labour Market Attachment 272 11.3.4. Who are the Poor Children? 274 11.3.5. Trends in Child Poverty Measured by Children ́s Own Economy 274 11.3.6. Child Poverty from the Children ́s Perspective: Does Parental Poverty Translate to Child Deprivation? 276 11.4. Policy and Political Debate around Child Poverty 279 11.4.1. Responses, Retrenchments, and Reforms 279 11.4.2. Discourse around Protecting Vulnerable Families/Children in the Policy Debate 281 11.5. Conclusions: Improving Outcomes for Children 283 APPENDIX A: CHILD POVERTY BY AGE 288 APPENDIX B: DATA SOURCES 289 APPENDIX C: POVERTY AND ECONOMIC RESOURCES: VARIABLE DEFINITIONS 291 References 293 12: Impact of the Recession on Children in the United Kingdom 296 12.1. Introduction 296 12.2. Financial and Economic Crisis 297 12.3. How Did Children Fare during the Crisis? 299 12.3.1. Child Poverty in the UK before the Financial Crisis 299 12.3.2. Child Poverty in the UK after the Financial Crisis 300 12.4. Policies 308 12.5. Summary: Improving Outcomes for Children and Learning from Experience 314 References 315 13: USA Child Poverty: The Impact of the Great Recession 318 13.1. Introduction: The Nature of the Crisis-Origins and Transmission Channels Relevant to Children 318 13.2. Poverty: Concepts, Especially for Children 320 13.3. Data, Measures, and Methods 323 13.3.1. Data 323 13.3.2. Measures 324 13.4. Results 326 13.4.1. Relative Child Poverty by Demographic Characteristics 329 13.4.2. Understanding Impacts on Children: The US Policy Response to the Great Recession 332 13.5. Lessons Learned from the US Experience 336 References 337 14: Learning the Lessons: Enhancing Capacity to Protect Children 341 14.1. Introduction 341 14.2. Learning from Diverse Countries and Country Experiences 341 14.3. The Varying Impact of the Crisis on Child Poverty 345 14.4. Responding to the Crisis 345 14.5. The Centrality of Social Protection 347 14.6. Social Protection and Social Spending as the Crisis Unfolded 349 14.7. Tackling Child Poverty and Promoting Protective Capacity for the Future 351 14.8. Legacies of the Crisis and Putting Children First 353 Index 356