1. Children of the Recession The impact of the economic crisis on the well-being of children in rich countries. A review of research underpinning Report Card 12 Dr Yekaterina Chzhen and Luisa Natali Southampton November 10, 2014 Innocenti Report Card 12 Children in the Developed World

2. Innocenti Report Card 12 Children in the Developed World OECD countries were affected by the most severe recession since WWII

3. Outline of the RC Introduction –Biggest economic crisis since WW2—how did children fare? The League Tables –Change in child poverty since the crisis (2008-2012) –Change in NEET since the crisis –Opinion polls on change in quality of life during this period –Each measures different dimension of family well-being Relationship between the crisis and children’s well-being –Trend lines by exposure –Children versus other groups Policy responses –Expansion then austerity Innocenti Report Card 12 Children in the Developed World

4. League Table 1: Change in child poverty (anchored in 2008) Between 2008 and 2012, child poverty increased in 23 of 41 rich countries. Largest relative increase in child poverty: – Iceland (+182%) – Greece (+76%) – Croatia (+75%) Highest level of child poverty in 2012: – Greece (40.5%) – Latvia (38.2%) – Spain (36.3%) Largest net increase in the number of poor children: – Mexico (+2 million) – United States (+1.7 million) – Spain (+0.8 million) Overall, the net increase in the number of poor children: 2.6 million. RankCountry Change (2008- 2012) 1Chile-8.67 2Poland-7.90 3Australia-6.27 4Slovakia-5.60 5Switzerland-4.80 6Norway-4.30 7 Republic of Korea-3.40 8Finland-3.20 9Turkey-2.76 10Japan-2.70 11Canada-2.44 12Romania-2.30 13Belgium-0.80 13Sweden-0.80 15Austria-0.70 16New Zealand-0.40 17Czech Republic-0.40 18Germany-0.20 19Israel0.55 20Bulgaria0.60 20Malta0.60 22Netherlands1.00 22Portugal1.00 24Denmark1.10 25United Kingdom1.60 26Slovenia1.80 27United States2.06 28Cyprus2.70 29Hungary2.90 30France3.00 31Mexico5.00 32Estonia5.10 33Italy5.70 34Luxembourg6.50 35Spain8.10 36Lithuania8.30 37Ireland10.60 38Croatia11.80 39Latvia14.60 40Greece17.50 41Iceland20.40

5. Innocenti Report Card 12 Children in the Developed World Change in child poverty by change in the GDP On average, countries that saw a larger drop in the GDP experienced a greater increase in child poverty.

6. Innocenti Report Card 12 Children in the Developed World European Union: Change in the poverty gap by change in the poverty rate The depth of child poverty increased in many European countries. Even in some countries where the rate of child poverty has fallen.

7. Innocenti Report Card 12 Children in the Developed World Child poverty increased in 19 countries; elderly poverty increased in 6 countries Child poverty increased faster (or fell more slowly) among children under 18 than among the elderly (65 or over) in 28 of 31 European countries.

8. Innocenti Report Card 12 Children in the Developed World Most affected – Croatia, Cyprus, Greece, Ireland, Italy, Portugal and Spain; Estonia, Hungary, Iceland, Iceland, Latvia and Lithuania. Moderately affected – Austria, Belgium, Canada, Finland, France, Germany, Israel, Japan, Malta, the Netherlands, New Zealand, Romania, Slovakia, Slovenia, the UK, the US Least affected – Australia, Bulgaria, Chile, Czech Republic, Denmark, Luxembourg, Mexico, Norway, Poland, Republic of Korea, Sweden, Switzerland and Turkey European Union: trends in children’s living conditions Median income in households with children Children in jobless households

9. Innocenti Report Card 12 Children in the Developed World Trends in children’s living conditions deteriorated in countries most affected by the crisis Difficulty making ends meet Difficult to live on household income

10. Innocenti Report Card 12 Children in the Developed World European Union: severe child material deprivation Largest absolute increases in Greece and Hungary. Largest relative increases in Greece and Iceland. Overall, the net increase in children living in SMD: 1.6 mln In two-thirds of European countries the severe child deprivation rate has increased.

11. League Table 1: Key findings Between 2008 and 2012, child poverty increased in 23 of 41 rich countries. –The net increase in the number of poor children: 2.6 million. –On average, countries that saw a larger drop in the GDP experienced a greater increase in child poverty. The depth of child poverty increased in many European countries. –Even in some countries where the rate of child poverty has fallen. –In general, there is a positive correlation between the child poverty gap and the child poverty rate. Child poverty increased faster (or fell more slowly) among children under 18 than among the elderly (65 or over) in 28 of 31 European countries. In many European countries, poverty increased faster for children in migrant families than for other children. In two-thirds of European countries the severe child deprivation rate has increased. Innocenti Report Card 12 Children in the Developed World

12. Innocenti Report Card 12 Children in the Developed World League Table 2: Change in the NEET rate among 15-24-year-olds RankCountrychange (2008-2013) 1Turkey-11.5 2Germany-2.1 3Japan-1.5 4Luxembourg-1.2 5Mexico-0.4 6Sweden-0.3 7Austria0.0 7Canada0.0 9New Zealand0.8 10Switzerland0.8 11Israel0.9 12France1.0 12Iceland1.0 14Ireland1.2 14Latvia1.2 14Republic of Korea1.2 14United Kingdom1.2 18Chile1.5 18Finland1.5 18Norway1.5 21Denmark1.7 21Malta1.7 21Netherlands1.7 24Australia2.3 25Lithuania2.3 26Czech Republic2.4 27Belgium2.6 27Estonia2.6 27Slovakia2.6 30Slovenia2.7 31United States3.0 32Poland3.2 33Hungary3.9 33Portugal3.9 35Bulgaria4.2 36Spain4.3 37Italy5.6 37Romania5.6 39Croatia8.5 40Greece8.9 41Cyprus9.0 Largest relative increase in NEET: Cyprus (+93%) Croatia (+84%) Greece (+76%) Highest level of NEET in 2013: Turkey (25.5%) Italy (22.2%) Bulgaria (21.6%) Note: Israel’s NEET rates are not internationally comparable Largest net increase in the number of NEETs: United States (+1.4 million) Italy (+0.3 million) Mexico (+0.2 million)

13. Between 2008 and 2012, the NEET rate (15-24) increased in 33 of 41 rich countries. In most of these countries, it was due to an increase in unemployment rather than inactivity. The youth unemployment rate (15-24) increased in 34 of 41 countries. In Greece and Spain, more than 50% of economically active young people were out of work in 2013. In countries most exposed to the recession, the rates of under- employment and long-term unemployment have tripled. Innocenti Report Card 12 Children in the Developed World League Table 2: Key findings

14. Innocenti Report Card 12 Children in the Developed World Change in the NEET rate by change in the GDP ratio (2008-2013)

15. Innocenti Report Card 12 Children in the Developed World Change in the NEET rate between 2008 and 2013: unemployment and inactivity, 15-24

16. Innocenti Report Card 12 Children in the Developed World Change in youth unemployment (15-24), 2008-2013

17. Innocenti Report Card 12 Children in the Developed World Change in youth unemployment by change in the GDP

18. Innocenti Report Card 12 Children in the Developed World Change in youth (15-24) unemployment vs change in prime-age (25-54) unemployment

19. Innocenti Report Card 12 Children in the Developed World League Table 3: How people say their lives have changed Countries ranked based on change 2013-2007Direction of changeRecent Impact Country Not having enough money to buy food you and your family needed? Experienced stress yesterday?* Satisfaction with life today Children in this country have opportunity to learn and grow? No. of indicators worsening 2013-07 ! = >2 indicators worsened 2013-11 Germany49360 Switzerland3128111 Israel429621! Slovak Republic2613342 Chile1321141 Iceland18163112 Australia13615 1 Austria4168212 Japan872781 Bulgaria1n.a.11291 Latvia2815752 Sweden41110342 Denmark8928151 Mexico2382282 Lithuania2942812 Republic of Korea32212171! Norway162115112 Czech Republic82512191 France26515191 Malta20251582 Poland18202833 United Kingdom82515212! Belgium131824173 Italy13213683 Luxembourg162515263! New Zealand23131 3 Canada83215342 Hungary41182463 Estonia351315363! Croatia29n.a.15332 Netherlands293024214! Romania32333373 Slovenia203412393 Finland203431214 United States372133214! Portugal352135314! Spain233040384! Ireland323638304! Turkey403837274! Cyprus383738404! Greece39 41 4!

20. The recession affected subjective perceptions of the quality of life. –Feelings of insecurity –Stress –Satisfaction with life –Opportunity for children to learn and grow In 18 of 41 rich countries, at least three indicators worsened between 2007 and 2013. The most affected countries are at the bottom of the league table. Innocenti Report Card 12 Children in the Developed World League Table 3: Key findings

21. …even during periods of economic growth in the past social spending has been in decline GDP and total expenditure Social protection spending, share of total spending (blue line, left axis) and family- and child-related spending, share of total social protection spending (blue bars, right axis). Innocenti Report Card 12 Children in the Developed World

22. Change in the effectiveness of social transfers in reducing child poverty

23. Innocenti Report Card 12 Children in the Developed World Selected recent significant changes to family benefits Bulgaria increased child benefits and child-care leave benefits in 2013–2014. Latvia eased conditions for childcare benefits in 2014, after scaling back the parental leave benefit in 2010. Poland introduced modest but positive reforms in family transfers, tax breaks and parental leave in 2012–2013. Malta implemented a comprehensive universal childcare plan in 2014. Greece made a disparate system of child-related allowances into a less restrictive, more generous single benefit in 2013. In Spain, unemployment benefits have been tightened, child-care benefits reduced and universal birth benefits eliminated. The share of the social protection budget spent on families and children declined from 5 per cent to 3.5 per cent between 2008 and 2011. Ireland cut child benefits several times from 2010 to 2014, while squeezing unemployment benefits and social assistance. On a positive note, tax reform in 2011 reduced deductions for lone parents and disabled children, and in 2014 initiatives were announced to improve health coverage for children under six and to reinforce school breakfast programmes. Since 2010, the United Kingdom has implemented a series of cuts that have reduced the real value and coverage of child benefits and tax credits for families with children. In 2013, a cap was imposed on the total benefits a household can receive, mainly affecting a small number of large families with high housing costs, while housing benefits were cut (the so-called ‘bedroom tax’), affecting large numbers of social tenants. One positive note: childcare provisions for two-year-olds have been expanded.

24. Innocenti Report Card 12 Children in the Developed World Inventory of Recent Significant Policy Changes for Programs affecting Families and Children Identified rule changes in over 60 programs across 39 countries since 2010/2011 – Child and family benefits, tax credits for families with children, parental leave, child care Eligibility criteria were made stricter in 25 programs and more generous in 17 programs Benefit levels decreased in 16 programs and increased in 29 programs Suggests a trend towards more targeted and narrowly focused family and child policies – Restricting the number of people but maintaining or slightly increasing the benefit levels

25. Make an explicit commitment to end child poverty in developed countries. –Prioritize the well-being of children in responses to the recession. Rescue, prevent, and give hope. –Eliminate extreme levels of poverty. –Increase investment in social protection policies. –Smooth the transition from school to work. Produce better data for informed public debate. –Improve the availability, timelines and usefulness of information on child well-being. Innocenti Report Card 12 Children in the Developed World Recommendations

26. Innocenti Report Card 12 Children in the Developed World Bibliography Martorano, B. The Australian Household Stimulus package: Lessons from the recent economic crisis Martorano, B. Is it Possible to Adjust 'With a Human Face'? Differences in Fiscal Consolidation Strategies between Hungary and Iceland Martorano, B. The Consequences of the Recent Economic Crisis and Government Reactions for Children Chzhen, Y. Child Poverty and Material Deprivation in the European Union during the Great Recession Kokkevi, A., M. Stavrou, E. Kanavou and A. Fotiou The Repercussions of the Economic Recession in Greece on Adolescents and their Families Chzhen, Y. Subjective Impact of the Economic Crisis on Households with Children in 17 European Countries Natali, L., B. Martorano, S. Handa, G. Holmqvist and Y. Chzhen Trends in Child Welfare in EU Countries during the Great Recession: A cross-country comparative perspective Bitler, M., H. Hoynes and E. Kuka Child Poverty and the Great Recession in the United States Chzhen, Y. and D. Richardson Young People (not) in the Labour Market in Rich Countries during the Great Recession The Australian Household Stimulus package: Lessons from the recent economic crisis Is it Possible to Adjust 'With a Human Face'? Differences in Fiscal Consolidation Strategies between Hungary and Iceland The Consequences of the Recent Economic Crisis and Government Reactions for Children Child Poverty and Material Deprivation in the European Union during the Great Recession The Repercussions of the Economic Recession in Greece on Adolescents and their Families Subjective Impact of the Economic Crisis on Households with Children in 17 European Countries Trends in Child Welfare in EU Countries during the Great Recession: A cross-country comparative perspective Child Poverty and the Great Recession in the United States Young People (not) in the Labour Market in Rich Countries during the Great Recession Holmqvist, G. and L. Natali Exploring the Late Impact of the Financial Crisis using Gallup World Poll Data: A note Martorano, B. Pre-crisis Conditions and Government Policy Responses: Chile and Mexico during the Great Recession L. Natali, Handa, S., Chzhen, Y., Martorano, B., Bitler, M., Hoynes, H. and E. Kuka Changes in child poverty in the OECD during the Great Recession - An initial view Exploring the Late Impact of the Financial Crisis using Gallup World Poll Data: A note Pre-crisis Conditions and Government Policy Responses: Chile and Mexico during the Great Recession Changes in child poverty in the OECD during the Great Recession - An initial view

27. Innocenti Report Card 12 Children in the Developed World Thank you!

28. LT1 –Change in the anchored child poverty rate (2008-2012) 2008: 60% of median equivalent household income after taxes and transfers 2012: base year poverty line adjusted for consumer price inflation LT2 –Change in the 15-24 NEET rate (2008-2013) Data from labor force surveys LT3 –Average rank of changes in four subjective “quality of life” indicators (2007/2008-2013) Data from the Gallup World Poll Innocenti Report Card 12 Children in the Developed World League Tables: Methodology

29. Poverty line (60%)

30. Child RELATIVE poverty LEVEL CHANGE 2008-2011 20082011Difference UK23.918.6 ↓ -5.3 Child ANCHORED poverty LEVEL CHANGE 2008-2011 2008 2011Difference UK23.925.7 ↑ 1.8 CountryMedian 2008Median 2011 at 2008 prices United Kingdom18938.0516974.4 Poverty line 2008Poverty line 2011 at 2008 prices 11362.8310184.64

31. Child RELATIVE poverty LEVEL CHANGE 2008-2011 20082011 Difference SK16.721.3 ↑ 4.6 CountryMedian 2008Median 2011Poverty line 2008Poverty line 2011 at 2008 prices Slovakia4797.0836044.4712878.253626.682 Child ANCHORED poverty LEVEL CHANGE 2008-2011 Difference SK16.711.9 ↓ -4.8

32. Innocenti Report Card 12 Children in the Developed World