Spending on children in the OECD and well-being outcomes: a question of how much or how?

Dominic RichardsonOECD ELS/SPDISCI conference, York, July 2011

Family policy in the OECD: varied objectives!

• Promoting choice for parents in reconciling work and family life

• Mobilising hitherto unused labour supply

• Enabling people to have children at the time of their choice

• Enhancing gender equity

• Reducing family poverty and enhancing child development

Family policy in the OECD: varied objectives!

• Promoting choice for parents in reconciling work and family life

• Mobilising hitherto unused labour supply

• Enabling people to have children at the time of their choice

• Enhancing gender equity

• Reducing family poverty and enhancing child development

Measuring child well-being

• Multi-dimensional measures vs. Life satisfaction

• Recently used comparative measures: – UNICEF averages and gaps (RC 7 and 9)– OECD average and trends by domain

• Limitations include:– Still too adolescent focussed, not

sufficiently disaggregated by age, sex, ethnicity, etc. Missing info, e.g. Neglect/ Mental health

1 in 8 children live in poor families

*Poverty thresholds are set at 50% of equivalised median household income of the entire population

Source: OECD (2011), Doing Better for Families

Proportion of children living in poor households*

Poverty risks are shifting

Source: OECD2008, Growing Unequal?

Source: OECD2008, Growing Unequal?

Net transfers reduce poverty risks by halfPoverty rates before and after taxes and transfers, active

population

Source: OECD2008, Growing Unequal?

Family policies are having to work harder

Poverty rates before and after transfers, changes since 1985

As incomes rise, so do poverty rates

Source: OECD 2010, Income distribution questionnaire

Changes in child poverty rates, 1985-2005

Standardised trends in the average equivalised incomes of households with children, 1985-2005 (OECD 2005=100)

Child poverty: equity and efficiencyThere is no clear relationship between increases in average family incomes and relative income poverty

among children

Source: OECD (2011), Doing Better for Families, OECD, Paris.

The policy mix varies across countries...

Data on tax breaks towards families are not available for Chile, Estonia, Greece, Hungary, Israel and Slovenia.

Source: OECD (2011), Doing Better for Families, OECD, Paris.

Public social spending as % of GDP , 2007

Patterns of public spending on children

• What is spent on children and when• Timing matters for child well-being• Testing a Heckman proposition

• Social expenditure data and education data

• Allotted by types from prenatal to age 27 using benefit rules

•Cash and tax / In kind / Child care / Education

Spending patterns changed little since ‘03

Source: OECD forthcoming (preliminary data)

Overall welfare effort matters

Source: OECD Doiing Better for Families

Early years interventions matter

Correlations between spending relative to family income and children's outcomes circa 2007

In 2003 early spending linked poverty rates…

Limitations of the age spending analysis

• Average spending by age, but what about differences by:– Family type – Family size – Income

• Only public spending, not private• Health spending and take-up has

been tested (though not variation in take-up)

• Does not address the how!

Policy choices mediate CWB outcomes

Risks of poverty are acute in young families

Source: OECD , Doing Better for Families, 2011

Equivalised net household income in employed households as a ratio of the total poverty threshold 2008

Services contributions to poverty reduction vary

Poverty rates among young children before and after accounting for cash transfers and early childhood and early education services, 2007

Childcare, working mothers and child poverty

Source: OECD (2011), Doing Better for Families, OECD, Paris.

Policy recommendations

• Develop policy to support child well-being as a system, with a coherent approach to the child life cycle and to the risks children face.

• Spend on children as if it were an investment portfolio. Subject the portfolio to a continuous iterative process of evaluation, reallocation and further evaluation to ensure child well-being is actually improved

• “Frontload” spending early in the child life cycle. Spend relatively more on:– Prenatal policies / Early childhood

• “Risk-load” spending. Spend relatively more on:– Children at high risk of poor well-being especially early on– Ensure that later investments in high risk children

complement earlier investments

www.oecd.org/els/social

www.oecd.org/els/social/expenditure

www.oecd.org/els/social/family/database 

www.oecd.org/els/social/childwellbeing

www.oecd.org/els/social/family/doingbetter

Some relevant links