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1 Child Poverty Risks in Belgium Wallonia Flanders: Accounting for a Worrying Performance Frank Vandenbroucke and Julie Vinck12 Please refer to: F & Vinck J (2013) ‘Child Performance’ P Maystadt E Cantillon L Denayer Pestieau B Van der Linden M Cattelain (eds ) Le modèle social belge : quel avenir ? Presses interuniversitaires de Charleroi (to be published November 2013) Abstract The Belgian welfare state is mediocre performer with regard to child poverty Moreover increasing We decompose cross-country differences changes over time by subdividing the population subgroups based on work intensity of household which they live use measures distinguish ‘work-poor’ ‘very work-poor’ households characterize national employment patterns an indicator labeled ‘relative severity poverty’ scores high analysis highlights features edifice are exceptional comparison characterized dual polarization: many children very work-poor households; simultaneously risks these examine impact size: although lone parent most European states share comparatively large we show that difference between other (in employment) not driven prevalence This also applied Flemish Walloon region separately leads three key policy challenges implying reconsideration both protection investment policies several domains JEL: I3 polarization spending Introduction at-risk-of-poverty rate ‘lead indicator’ future problems A may signal inadequate and/or poorly functioning labour markets related lacunae care education system In turn makes success more difficult obtain given strong link economic cultural status their at school words cause effect vicious circle underperforming systems notwithstanding its long tradition security As first step understand why our performance worrisome apply analytical technique essence accounting device decomposition Although this mechanical all simplicity it quite but have been subject much research One skewed distribution jobs Elsewhere study phenomenon means ‘polarization analysis’ (Corluy 2013a 2013b) paper same simple among Another feature i e little or no participation market These observations professor KULeuven Faculty Economics Business UA Herman Deleeck Centre Social Policy affiliated 2 thank Guy Camp Vincent Corluy supply data comments interpretation Ron Diris Bea Maarten Goos Emanuelle Desmedt proofreading work-poor; financial Section sets scene providing elementary information Flanders illustrates confronting crucially determined ‘work intensity’ It explains meaning ‘household introduces concepts ‘severe 3 structure poor belong 4 formal analyses; can skipped readers knowing mainly interested results 5 decomposes basis using as benchmark country 6 digs deeper into intensity: investigate whether pattern explained relatively 7 another determinant conclude challenge improve level whilst avoiding ‘(severe) traps’ level: should trigger 8 increase (as observe since 2005) again do before because developed last decade confronted (disappointing) change meanwhile concluding section sketch reconsidered light regions ‘child shortcut defined Eurostat individuals below age 18 Being risk living equivalized net disposable income 60% median consider one parameters assessment notion ‘poverty’ so used caution reasons concept presupposes sharing resources within necessarily case here rather crude headcount: simply threshold does account depth faced ‘at of’ without meaning: present measure signals cut off mainstream society lack headcount defines relation where individual happens living: relative floating every year number countries decreased during crisis years reflecting decrease incomes: has favorable needs increased families non-poor alike Our EU Statistics Income Living Conditions (EU SILC) ‘2006’ ‘2011’ etc SILC survey years; except United Kingdom Ireland reflect incomes Hence essentially relating 2005 2010 calculations two situation particularly alarming Brussels (and included Belgium) include separate regional analyses sample too small Unless otherwise indicated always refers ‘households’ et al (2013 pp 8-10) discuss rates thresholds anchored For thorough discussion measurement issues involved see Decancq (2014) own user base calculate (based income) To sure integrated tax benefit only correct relying from normative perspective However calculating yields interesting additional intra-regional comparable implies sobering (which less well terms than might assume purely Belgian-wide threshold) likewise harbors intraregional inequality rich assume) On 2011 7% quarter Wallonia’s (24 9%) compared 10 4% Applying headcounts 20 8% 13 1% conceived ‘diminishes’ though remains high; figure hand increases Figure when When limit EU15 (excluding availability) appears equal unweighted EU14 average slightly weighted takes size Comparing nation would constitute category mismatch if interpreted due caution: matter fact conceal important disparities (Germany telling case) outcome reflects realities different understanding position league German league) At-risk-of-poverty Notes: ‘FL-FL’ ‘WA-WA’ calculated ‘FL-BE’ ‘WA-BE’ excluding *: significantly 0 05 significance making independent samples t-test Source: compiled authors See 84-85 illustration argument Germany Given Belgium’s history pioneer record disappointing lead state: just worrying Household starting point latter measured ratio total months worked working-age members could theory intensities bracket 20-59 considered ‘working age’ students who excluded calculation persons reported having part-time estimate full-time equivalents computed hours habitually interview correlate negatively 2a 2b display five subsets households: (work ranges 85% 100%) (between 55% 85%) medium 45% 55%) low 20% 45%) (20% less) (the Ireland) Wallonia; figures (Belgian line) (regional lines) was 7%; 68 2% ten times higher profile belongs crucial factor explaining her his shows deviates registered 2011: 81 subgroup significantly6 average; contrast 3% lower intensity; significant work-intensity gap haves not’s – ‘have’ referring marginal attachment Rather surprisingly holds Children face exceptionally reference So highly polarized even ‘internal’ view nuanced: statistically significant; What really particular understood working four days week whose 80% couple test Since 1b conservative observation true earlier vintages instance 2008 were partner Reconciling family responsibility entail costs two-parents And obviously euros probably former emerges compare distinguishing types broad classes (Belgium EU14) ‘children’ until 24; count adults [20-59] Lone parents poverty: 69 62 Households low: 89 5% 71 78 5%8 66 short dire straits low-medium-high interval positions change: class group 33 3%; estimations differ ones cited earlier; definitions elsewhere legend 12 4%) nearly disappears (1 4%); considerably (8 picture similar better question: households? applying 37 9% % children; (though smaller Is result levels Or above intensity? Across there uniform answer some Appendix (using explain below): admittedly That justifies focus context But eliminate effort identical metric’ constellations circumstances conclusions return raises fairness adequacy right now shift attention what extent state’s indicators (not 20%); label second (i less); description will workpoor third call ‘the introduce must confused poor’ An he/she (financially) poor; thereby ‘working’ minimal (e g being period limited) mixes (is employed employed?) (what income?) intrinsically often leading unwarranted unrelated cases individually counted limited belong; consequence irregularly (Marx Nolan 2014) Verbist regression models non-elderly (testing explanatory power severe poverty) covered 9 2011) turns out combining variables best fit suggests country-specific concentration play role next general across develops question indicators: comparing develop specific explanations outlier? subdivide highlight distinction notions ‘income-poor’ lowest parts bars represent those combine expressed percentage middle (grey) upper work-rich From say truly household’s potential valorized nevertheless sum corresponds stress conclusion pooled series whole hold ‘naïve’ presented dependent variable (i) (ii) (iii) transfers pensions bivariate correlation coefficient 56 24 -0 15 01 deep period) provides such indicates (with respect (Vandenbroucke 2013 p 29) subdivided Total missing values certain internal Except Hungary Malta belonging 60 proportion prompts salient summarizes striking (on horizontal axis) vertical Dividing axis 11 Work Note: disparity poverty’: around Scandinavian 40 50% UK Estonia Greece Spain Italy larger Cyprus Switzerland Luxemburg Poland Slovenia Norway; 14% Bulgaria influenced correlates strongly (negatively) Severe correlated diversity patterns; trend line nonemployment ILO Labour Force Survey 2007 2009 80 90; 50 (exceptionally year) 65 including (2014 18) Relative 15% Romania 35% 36% 42% Denmark poverty; top range specificity pursue digging Obviously income-poor (when corresponding above) attributable factors: financially (very) structural disentangle (severe) done shown Decomposition analysis: decompositions characteristic written If T k s represents value each follows: (1) ∑ characteristics under review Sections 8) 6) Equation decomposing intertemporal ∆x (or region) 2006 Formally (2) indicating Belgium; With ̅we follows equation (3) ̅ ̅̅ ∆ then term side accounted hypothesis characterizing subgroups) workintensity identical) ‘differences between’ within’ vein country) ‘changes (due divided (T=2) reduced following formula (since + = ∆s – ): (4) ( ̅) example partition ‘work-rich’) contributory factors13: contribution [ ]; ii iii ] ‘difference comes decomposition; factors together underlying components exercise (taking sizes admit robust proceeding empirical illustrations caveats taken board reveal causality: basically dissociated presuppose associated definition ‘mechanical’ character overall determinants crosscountry differences) benchmarking application selection 14 explores correlations (examining sections residual show; linked did available (for 19 old; residual) define adult [18-59] while graphs avoid any misunderstanding reason changes) ‘sum decomposition’ observed Using instead yield taking variables); focuses plays expression ‘cross-country differences’ follow reader read Belgium’: descriptions fortiori combined insights Decomposing (‘Cross-country’ depending 45 55 85 per cent cut-offs ‘Differences Countries left Norwegian points  Norway ‘between difference’); groups ‘within (0 points) (but Iceland Finland) outperforms various degrees Romania… main stems focusing Table A1 displays (two footnote 16 Taking (9 decomposed significant) (-0 Finland outperform run Nordic largely Spain: seen entirely segment work-poor: estimates confidence intervals them Nevertheless tentative drawn: perform ‘trade-off’ least comparative assessing ex post outcomes macro worse notably Southern (although further questions First Wallonia? Second (whilst work-richer segments perspective) explore touch upon wonder chose (by children) note (see 9) Europe within/between 3) dominates differences’; 17 ‘not emerge go sense respects choice drives remain Patterns structure: showed expect differences: ‘extended families’ imply degree ‘pooling’ non-employment hence sufficient explanation poverty? dividing 8a reiterates 8b presents Here 59 income-poverty ‘within’ diminishes Norway/Denmark cf reverse shape Eurostat-definition: ‘a person aged 18-59 exclusion composed 25 people completely ’ Figures illustrate observations: marginally (across 36 6% 39 category); 28 corollary children: big majority 77% review); minority 16%); iv diversified ceteris paribus how ‘lone parent’ employment? (including Wallonia) 4) (severe 21 parents: 30); Latvia never item [i] supra) (except IE MT) part dominate pursues WP RSWP (superscript population) write subgroups: (5) 22 countries/regions): (6) ̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅ ̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅̅ ̅̅̅̅̅̅̅̅̅̅̅ ̅̅̅̅̅̅̅̅ ̅̅̅̅̅̅̅̅̅ Thus regions) by: (1st 6); (2nd (3rd (4th black contributing equation) Visual inspection reveals minor 23 result; carries heavy weight (2013a indices’ inspired Gregg Scutella Wadsworth (2008 2010) ‘jobless household’ so-called (a jobless workingage weeks survey) index actual hypothetical assuming distributed randomly about expected ‘individual intensities’ matched random formation Introducing random’ counterfactual sociological mathematically easier binary ‘jobless/non-jobless’ Yet employ Traditionally extended model negative lived structure) Polarization became issue British agenda end nineties onwards declining 2000s Overall 1995 convergence EU: initially tended constitutes exception moving mid 2000’s (2013a) analyze stratification (2013b) dig long-term data; space forbids enriched inquiry influencing decisions cannot examining How perspective? brings retrieved 201119: 2008) 80; graphical common practice administrative public ESSPROS classification gauge importance well-known problem gross taxation regime benefits; tend overestimate real benefits like France (Adema Chart I 11) allow us assess demographic however thoroughly GDP 1) (indicated ‘T-kids’); (P-kids); (T-all); (P-all) ‘Household income’ standardized usual equivalence scale take account; way All according OECD modified 26 allows spending: benefiting cash T-kids P-kids ranked children’s incomes; biggest spender pension P-all (P-all T-all) assessed solid dark grey bars: Portugal Poland… ‘pension heavy’ Today Third orientation (both pensions) (T-kids P-kids) (T-all P-all) bar households) obvious variety respect: pension-heavy receive support Spending oriented’ (so conceived) Fourth states: (where amount 49%) Slovakia Malta; supporting emphasize hit spend unemployment become appear generous se doing underscored Wallonia: ante framework oriented tilted towards nonetheless cautious quality prima facie neither nor seem thing effectiveness ‘per euro’ ‘efficient’ fighting notoriously macro-level; ‘efficiency’ strict Paretian word quasi-impossible efficiency spending’ Lefebvre 2012 spenders non-pension previous facto early retirement influence illustrated report Employment Developments ‘poverty reduction pensions’ multigenerational seems (European Commission 222) underestimate 27 16-18) conceptually ambitious ‘efficiency scoreboard’: Pareto-efficiency productivity conditional ‘inputs’ ‘pro-poorness’ conclusive still leaves substantial ‘unexplained disparity’ fabric architecture capita human capital readily ‘explained’ other) macro-comparative control scoreboard’ improves somewhat neutralized becomes Continental type scoreboard discounting bad ‘mediocre’ far excellent societal unambiguous practical certainly room improvement existence good Can improved? Micro-simulation helpful Maréchal Perelman Tarantchenko (2010) allowances Up categories beneficiaries unemployed disabled pensioners) entitled supplements simulated reforms extend income-poor) tested qualify ‘modest’ attain edge passing benefits): decreases Simultaneously reach considerable baseline scenario (no reform) kind 53 them; 70% reaches 97% Interestingly budgetary limited: budget roughly By 5th reform reduces extending 96 cost-effective operation ‘room improvement’ current extends incentive make transition inactivity (As supplement means-tested proposed create ‘income pay At sight worry central Admittedly studied couples single parents; ‘work-rich’ giving scenarios partially (2010): miracles revisiting necessary broader reexamination dimension beyond domain standard earner increasingly determines decent dilemma whatever Next targeted creation activation) constellation replacement constrained disincentives (notably minimum wages) wages considerations cost competitiveness insufficient protect against wage children25) especially traps’) Mechelen putting reconsider need schemes designed alleviate costs’ facing singles single-income earners child-rearing healthcare housing toolset greater assigned ‘cost-compensation’ intelligent nuanced principles selectivity today maximum billing health care) development design services utmost Disquieting developments: adds evolution older surveys 2003 Bogaerts Vandelannootte 2: paper: 100% 29 elderly EUROSTAT website hazardous instability SILCbased 2006: succeeding decreasing 2010; choose fair trends consistent Compared stable conceals intergenerational risks: rate; clear change); Over thresholds) thresholds); policy-makers complacent agency Kind en Gezin collects fine-grained [0-3] They ‘kansarmoede’ encompassing stimulation register upward urban contexts findings warning [0-17] yet soon provided migration figures: mother non-Belgian origin ‘kansarm’ versus origin; growing markedly (Kind includes non-monetary non-material aspects partial Assessing starts from; den Bosch De Vil 2003-2011 optimistic 30 data) integration migrant 14a cut-off evolutions broken down pre- post-crisis 14b 14c ‘Changes (keeping shares constant) Netherlands Czech Republic Flanders) contributed deteriorating 31 32 ‘gain’ improving work-intensities Between dynamics 14c: boom Member States gain offset vulnerable followed interpreting forget boom); changes’ positive gives detail concerns increase27 Consequently half criterion 47 43 54 2006-2011: (2006 evolved formulate cautiously population; already development: born outside EU25 (that EU27 Romania) factor: (less ‘non-EU25’ everything: non-EU25 100-102) participate generate native (SILC 2006-SILC coincided prosperity deliberate activating strategy viz-à-viz Should activation failure old distributive new called Lisbon Strategy March 2000 deny tensions trade-offs soul-searching case: banner active welfare’ incentives incrementally improved lowering personal contributions bottom taxes earned close monitoring harsh sanctions levels; foregoing summary possible prior challenges: traditional ‘financial incentive’ arsenal ill-equipped up Making bigger requires reduce unqualified leavers) possibilities existing stock low-skilled labour) calls targeting parents) well-designed facilities affordable women earnings mothers) enhanced damaging introducing selective neglected Conclusion: persistent Looked consequences think ‘haves’ ‘have region; complicated countries) way; recalculate entire 34 youngest generation forecast macro-level doomed ‘more employment’ ‘less Activation traditionally organized recipe contrary ‘activation turn’ suggest went worsening redress enhance migration: analysis; ‘work-rich standard’ characterizes creates Possibilities examined Together priority government 35 References Adema W Fron Ladaique (2011) Welfare State Really More Expensive? OECD: Migration Working Paper 123 Reduction successful states? Oxford University Press N security: Cracks paradigm 20th Conference French-speaking Economists volume V Individual Methodologies Papers edition Union; doi: 2785/41846 Antwerp CSB-Working forthcoming K Goedemé Vanhille ‘The Union: data’ (pp 60-93) R ‘Reconciling workless Theory evidence Britain Australia’ Journal Population 1: 139-167 (2008) ‘Two sides story: measuring polarisation work’ Royal Statistical Society: Series (Statistics Society) 171 4: 857- 875 Het Vlaanderen Brussel (2012) L’Etat-Providence Dumping Paris Editions Rue d’Ulm C S G Presidency Council Union Marche-en-Famenne Sept Marx ‘In-work 131-156) Active Revisited Brugge Die Keure Excessive Imbalances Euroforum ‘Mapping 1-59) evolutie van armoede bij ouderen nader bekeken Federaal Planbureau 6-13 Vandelannoote D Supplementary local agencies traps Flemosi April APPENDIX [0-20] [20-24] (cut-offs: 20-45-55-85) categories) work-intensities; group; 38 (supporting 7) Share WI [0-0 2] ]0 2-1] O 9* 42 4* 2* 332 41 5* 199 FL-BE 8* 196 IS 002 FI 6* 024 Y -1 178 FL-FL 72 193 1* 511 87 0* -2 Z 79 AT 67 089 70 7* 176 032 H 3* -6 -3 BELGIUM FR 76 -4 134 EE 77 149 LU 63 -9 214 MT 163 WA-WA 75 86 PL 74 -10 194 PT 73 -8 073 HU -5 GR 028 LT 052 LV -7 085 WA-BE 318 IT -11 183 ES BG 117 RO -14 -19 Residual Country AROP [0- 17] Explanatory Difference Sum decomposit ion 3: A2 divide comment