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Who Suffered Most in the Recession? A Cautionary Tale
Dorothy Watson, Bertrand Maître, Christopher T. Whelan, Helen Russell,
Irish Social Policy Association Research Conference
in association with the Social Research Association
Dublin, July 1 2016
Background It is often assumed that the disadvantaged ‘suffer most’ when
there is an economic shock
Is this true – or in what sense is it true when it comes to poverty
and economic stress?
Did the disadvantaged groups experience the greatest increase in
poverty and stress in the Great Recession ... In absolute terms (an absolute percentage increase)?
In relative terms (as a % of starting risk level)
Are people with a disadvantaged risk profile now a greater proportion of the
poor than they were pre-recession?
We examine the issue drawing on SILC data and on data from the
Growing up in Ireland Survey
Outline
Poverty trends
Deprivation by social risk group
Families before and after
Summary
Implications
Data & Measurement
Irish Survey on Income and Living Conditions (SILC, CSO, 2004-14)
3 main Poverty Measures:
A. Income poverty: in a household with
disposable income below 60% of median
(after adjusting for size and composition)
B. Basic Deprivation: unable to afford
2+ of 11 basic goods or services
(adequate food, clothing, heating,
replacing worn-out furniture, basic social activities)
C. Consistent Poverty: both income poor and deprived
A C B
Trends since 2004: Unemployment, Poverty, Deprivation and
Consistent poverty by Year (all age groups)
Unemployment
Income poverty
Basic deprivation
Consistent Poverty
0%2%4%6%8%
10%12%14%16%18%20%22%24%26%28%30%32%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Income poverty: Disposable equivalised income below 60% median
Basic deprivation: Cannot afford 2+ of 11 basic goods services
Basic Deprivation did a better job than income poverty of capturing the shock of the recession
Social risk groups, 2004 – 2013 - sizes
4%
9%
15%
36%
11%
6%
4%
17%
Lone parents
Working-age disabled adult (WD)
Other young adults (18-29)
Other working-age adults (30-65)
Other adults aged 66+
Child of lone parent
Child of WD
Other children
0% 5% 10% 15% 20% 25% 30% 35% 40%
More than one third of children are in vulnerable families
Social Risk and Trends in Basic Deprivation (up to 2012)
Lone parent
39%
Child of LP, 50%
Working-age disabled adult
(WD)
Child of WD
Other children Other adults 18-29
Other adults 30-65
Older adults 66+
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Boom (2006-7) Recession 1 (2008-9) Recession 2 (2010-12)
Which group had the biggest increase?
Answer depends on whether we focus on the absolute or relative increase.
Absolute = the percentage point increase in risk, e.g. 5% if risk goes from 15% to 20% (20-15=5)
Relative = the increase as % of starting value, e.g. 33% if risk goes from 15% to 20% ((20-15)/15=0.33)
A related question is how the social risk composition of the deprived group has changed, e.g. what % of the deprived are lone parents & their children?
Absolute Change in Deprivation Rate from Boom to Late Recession by Social Risk group (Percentage point increase, e.g. 20-15=5)
10% 11%
15% 22%
14% 16% 12% 2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Loneparent
Child of LP Working-age,
disabled(WD)
Child ofWD
Otherchild
Otheradults 18-
29
Otheradults 30-
65
Olderadults 66+
Boom Absolute change
Relative Change in Deprivation Rate from Boom to Late Recession by Social Risk group (Percentage point increase as % of base, e.g. (20-15)=5/15)
35% 39% 23% 22% 9% 9% 7% 9%
10% 11% 15% 22% 14% 16% 12% 2%
30% 27% 65%
102%
164% 174% 169%
25%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
Loneparent
Child of LP Working-age,
disabled(WD)
Child ofWD
Otherchild
Otheradults 18-
29
Otheradults 30-
65
Olderadults 66+
Boom Absolute change Relative change
Relative Change in Deprivation Rate from Boom to Late Recession by Social Risk group (increase as % of base, e.g. (20-15)/15 = 0.33)
30% 27%
65%
102%
164% 174% 169%
25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
180%
Loneparent
Child of LP Working-age,
disabled(WD)
Child ofWD
Otherchild
Otheradults 18-
29
Otheradults 30-
65
Olderadults 66+
Change in Social Risk Composition of those who are Deprived between Boom and Late Recession (% of Deprived)
29% 20%
23%
18%
11%
16%
11%
13%
18% 28%
7% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Boom (2006-7) Recession 2 (2010-12)
% o
f d
ep
rive
d
Older adults
Adults 30-65
Young adults
Other children
WD & children
Lone parents & children
Impact of the recession was quite general
Impact of the recession was not limited to the most vulnerable families (e.g. lone parents)
We also see this in the GUI data where we compare the economic stress experienced by families before the recession (when the GUI child was 9) and during the recession (when the child was 13)
Economic stress = difficulty in making ends meet
Increased for all family types
Since there are more couple than lone parent families, the increase in stress for this group meant that more of the stressed families in the recession were couple families
Over 7,000 families interviewed in 2007 and in 2011/12
Economic Stress (Families, GUI data)
22%, 50%
4%, 17% 6%, 33%
40%, 30%
18%, 27%
21%, 42%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0.5 1 1.5 2 2.5 3 3.5
Pre-recession (Risk %, Composition %)
Recession (Risk %, Composition %)
Lone parent Couple, 1-2 children Couple, 3+ children
Summary
Trends – Impact of recession most visible in deprivation
income poverty affected by falling threshold.
Deprivation varies by age group and family type Highest for LP & their children, lowest for older adults.
Deprivation increased for all social risk groups Despite falling unemployment, deprivation remains high in 2014
Hardship became more general with the recession Increased for all groups
Relative increase (from smaller base) greater for those less affected in the boom
Because they were large groups, they accounted for a much bigger proportion of deprived/stressed families post-recession
Families experiencing hardship post-recession are more diverse
Implications
More of those who became deprived as a result of the recession came from relatively advantaged backgrounds
Disadvantaged groups also experienced a deterioration in circumstances
Arguably have fewer resources with which to cushion the loss
The more general profile of those experiencing deprivation and economic stress post-recession suggests policy response must be broader– housing, child care as well as income supports.