Poverty among British Children: Chronic or Transitory?

We investigate the nature of child poverty in Britain, adding a longitudinal perspective to cross-sectional pictures such as provided by previous research. Using panel data from the British Household Panel Survey, we analyse poverty over a six year interval (1991-6). We provide information about how many times over this period each child or adult in our sample was poor. In addition, and the principal focus of our research, we provide information about the extent of chronic and transitory poverty. For this analysis, we use information about current incomes and smoothed income (the six-year average of each individual’s current income) relative to the poverty line. Whichever longitudinal poverty concept we use, we find that children, especially very young children, have high poverty risks compared to other groups in the population. Since people’s incomes typically vary from one year to the next, the observed (current income) poverty status for many people may not match with their chronic poverty status. Consequently policies aiming to reduce chronic poverty using means-tested benefits will be compromised if benefits are targeted using information about current incomes, as we demonstrate with a numerical illustration. 1. Child poverty in Britain: a topical issue 2. Concepts: smoothed income, chronic and transitory poverty 2.1 Current income versus smoothed income 2.2 Aggregating poverty over time and across individuals 3. Data and definitions 3.1 Datasets 3.2 The definition of income 3.3 The poverty line 3.4 Age groups 4. Trends in child poverty in Britain 4.1 Long-term trends in poverty 4.2 Trends in poverty, 1991-6, disaggregated by age 5. Repeated, chronic and transitory poverty: results 5.1 Repeated poverty 5.2 Total, chronic and transitory poverty 6. Chronic poverty and income transfers to poor children 6.1 Poverty reduction policies 6.2 The overlap between current and chronic poverty 6.3 Targeting chronic poverty: a numerical illustration 7. Concluding remarks References Tables 1-4, Figures 1-3. Acknowledgements This paper is prepared for inclusion in a volume on Falling In, Climbing Out: the Dynamics of Child Poverty in Industralised Countries (edited by Bradbury, Micklewright and Jenkins), with support from UNICEF’s International Child Development Centre, Florence. Hill acknowledges with appreciation funding support from the Institute for Social and Economic Research at the University of Essex during her visit in Spring 1998. Jenkins acknowledges core funding support from the UK Economic and Social Research Council and the University of Essex. The authors thank their project collaborators for their helpful comments and suggestions. Contact addresses Hill: Institute for Social Research, University of Michigan, PO Box 1248, Ann Arbor, MI 48106-1248, USA. Email: [email protected]. Jenkins: Institute for Social and Economic Research, University of Essex, Colchester CO4 3SQ, UK. Email: [email protected] i Poverty among British children: chronic or transitory? by Martha S. Hill and Stephen P. Jenkins