The enduring impact of the economic crisis on child poverty
Sara Ayllón, Department of Economics, Universitat de Girona
Poverty during childhood has lifelong consequences. It is often accompanied by material deprivation, a lack of educational and leisure opportunities and strong stigmatisation. The economic recession that began in 2008 had dramatic consequences for children and aggravated a situation that was already very worrying beforehand. Children’s welfare worsened especially from 2008 to 2014 and, despite a slight improvement in recent years, child poverty rates today are still among the highest in Europe.
1. Relative poverty and anchored poverty
The approach that has been used traditionally to analyse poverty is that of relative poverty, which takes into account the economic resources that an individual has in relation to the standard of living of the society in which he or she lives. This approach considers as poor those people living in a household with an income below 60% of the equivalised median income (also taking into account the number and ages of household members).
If we use this relative approach to measuring poverty (figure 1) we observe that, from 2008 to 2013, the childhood poverty rate remained quite stable, and it increased slightly from 2013 to 2014. The poverty rate was already very high before the start of the economic crisis. Thus, the rise in poverty in 2014 meant that 30.2% of children in Spain were living under the poverty threshold, whereas for the general population this percentage stood at 22.1%. Subsequently, between 2015 and 2017, despite the growth of the economy, the childhood poverty rate only decreased very slightly and settled at around 29%. The year 2018 points to a faint improvement but it is still unkown whether this tendency will be confirmed in the future.
The results are even more concerning if we analyse the data on anchored poverty (figure 2). This measurement better reflects the impoverishment of society during a period of crisis; it is calculated by anchoring the poverty threshold at a moment in time (in this case, 2008) and updating it with the evolution in prices to take into account possible changes in the cost of living (Ayllón, 2015, 2017). Unlike the relative poverty measurement, with this approach the poverty threshold does not decline over the course of time even if the incomes of the population as a whole do so.
Despite the economic recovery, in 2018 three out of every ten children were living in a situation of anchored poverty
When analysing the data on anchored poverty (figure 2), we observe an important deterioration in the situation of children in Spain during the crisis. In just six years the poverty rate rose from 26.9% (2008) to 38.9% (2014) among the child population. This worsening of the economic situation was general for the entire population but particularly intense in the case of children and young people. In 2014, four out of every ten children were living under the anchored poverty threshold. From 2014 onwards, with the improvement of the general economic situation, the anchored poverty rate for children decreased until it stood at 29.9% in 2018. Even so, it is worth underlining that the anchored poverty rate among children is still much higher than it was prior to the crisis.
2. The close relationship between child poverty and the labour market
The economic crisis did not affect all children in the same way. Their parents’ relationship with the labour market and the composition of the family structure are two main factors that help explain poverty risk during the early years of life.
One way of evaluating the impact of the crisis on child welfare consists of analysing the number of children who live in households with low labour intensity. The members of these households work less than 20% of their potential and, therefore, have virtually no income originating from the labour market. There is a close relationship between living in a household with low labour intensity and suffering childhood poverty. This relationship, however, is not solely the consequence of the economic crisis: in 2008, some 71.7% of children living in households with a low labour intensity were poor. This circumstance is an example of the lack of protection suffered by minors living in households with low labour intensity, even in times of economic prosperity.
In 2008, some 7.2% of adults and 4.2% of children were living in households with low labour intensity (figure 3). From that point onwards, and due to the rise in unemployment, the risk also increased of living in a household of this type, until it reached a high point in 2014 when some 14.3% of minors were living in this situation. During the economic crisis, the relationship between child poverty and households with low labour intensity also intensified (figure 4). And from 2011 onwards, eight out of every ten children that lived in households with low labour intensity were poor. From 2014 onwards, the percentage of children living in households with low labour intensity has declined although, as happens with the data on anchored poverty, the figures are still higher than they were prior to the crisis. The most concerning point is that in the last years of the period analysed, the relationship between child poverty and households with low labour intensity has intensified to such an extent that almost nine out of every ten children living in a household with low labour intensity are poor.
The risk of child poverty varies according to the composition of the family household and whether the child’s parents are in employment or not (figure 5). The highest risk is suffered by children who either live in single-parent households where the father or mother does not work, or who live with both parents and neither of the two work. Especially serious is the economic condition of children living with both parents out of work, a situation that, despite the growth of the economy in recent years, has worsened. In 2018, eight out of ten children living with two parents where none of the two worked were poor (in 2008, the figure was seven out of every ten).
The children with the greatest protection are those who live with both parents and both parents are working. When only one of the two is working, however, living with both parents does not necessarily guarantee a decent standard of living, because, as we have seen at the start of the period studied, over three out of every ten children in this situation were living below the poverty threshold. The situation for this group of children has barely improved in recent years; in 2018 over 40% of children in this type of household were living in poverty.
Living with both parents, if only one of the two works, does not guarantee a decent standard of living during childhood
Children who live in large families face an especially high risk of poverty, particularly if there is only one parent in the household. However, the situation of single-parent households with a single child is that which has deteriorated most over the last ten years (graph 6).
3. Material deprivation auects a large number of children
The results on economic poverty, which only take into account household income, can be complemented by observing the evolution of various indicators on material deprivation. These indicators include a multidimensional perspective and consider, for example, people’s access to various commodities, or the capacity to live in housing offering minimum living standards. Table 1 shows the percentage of children in each of the diverse material deprivation indicators.
One out of every ten children lives in a household that cannot aflord to maintain the home at an adequate temperature
As shown in this table, there is a very high percentage of children who are still suffering significant deprivations today. In the period 2015- 2018, some 3.4% of children were living in households that could not afford a meal with meat or fish every other day, while 9.9% were living in households that could not keep the home at an adequate temperature and 15.3% had great difficulties in making it to the end of the month, among others. Such levels of deprivation will leave a mark on the development of these children that will endure throughout their entire lives (Ermisch et al., 2012).
AYLLÓN, S. (2015): Infancia, pobreza y crisis económica, Barcelona: Obra Social ”la Caixa”.
AYLLÓN, S. (2017): «Growing up in poverty: children and the Great Recession in Spain», in B. CANTILLON, Y. C, S. HANDA and B. NOLAN (eds.): Children of austerity: impact of the Great Recession on child poverty in rich countries, Nueva York: Oxford University Press.
ERMISCH, J., M. JäNTTI and T. SMEEDING (eds.) (2012): From parents to children: the intergenerational transmission of advantage, New York: Russell Sage Foundation.
What future lies ahead for millennials? We will be discussing this question
with Fabrizio Bernardi, Professor of Sociology at the European University
Institute. From 29 November to 1 December, at CaixaForum Madrid. Event
How can we put an end to the intergenerational transmission of poverty? We
analyse proposals that defend universal child benefit and other policies
that propose selective benefits for poor families with children.