Nova workboard

a blog from young economists at Nova SBE


Italy raising Children Poverty

In Italy, there are 10.048.000 people that live in relative poverty conditions (16,6% of the total population). Among them, 6.020.000 are absolute poor, which cannot purchase products and services to guarantee rights to live in dignity (9,9%) (ISTAT report on poverty in Italy, 2014). The rate among the southern families has increased for the 31%, comparing it to the north which remained stable.

Moreover, the 12,6% of the families is in relative poverty condition, and 7,9% in absolute poverty, with a threshold value of €972,52 per two components family, which is €18 lower than (-1,9%) the threshold value in 2012.

The 22,6% of children in Italy is at risk of poverty. Children poverty means that the families have a too low income to guarantee the needs for their adequate physics, physical, intellectual, and social development. The data shows that the percentage of absolute poverty among this segment is the highest in the last 15 years, with an increase of the 3,3% compared to the 2006 data. Moreover, the adult at risk of poverty diverges at 8,2% compared to the underage.

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Italy: percentage of people in absolute poverty ranked per age (ISTAT)

Juvenile poverty increase with the number of underaged within a family. The incidence of poverty is increased from 14,9% to 17,6% for families with one underage child, from 17,5 to 20,7% for families with two underaged, and from 32,3% to 36,3% for families with three or more children, from 2006. However, the average of numerous family is decreased in the last twenty year, yet the southern regions’ incidence is 10% higher the northern regions.

Italy have inner differences in terms of poor concentration, who born in the southern regions have a much higher probability to grow up in a poor family. The data shows that the incidence of poverty is below to the national average in the Northeast (14%), North-west (10,9%) and Centre (13,2%) regions; the south of Italy has a 40% underage poverty rate, and 44,7% in the Islands. Therefore, it can be seen that there is inequality within the country regions.

Facing these preposterous data, Italy outclass Germany (that is the only county with an elder index higher than Italy) in the percentage of the GDP dedicated to the pension fund, yet it is among the bottom positions for public funding to the support of families, youth, and maternity (1,3% of the GDP against the European average of 2,2%)!

In the recent years, Italy’s legislation has launched different initiative directed to the support of families with underage children (such as Bonus Bebé, fiscal deductions, and allowance for numerous families), which have had small-scale and scarce effectiveness. In addition, a Eurostat study displayed that the public intervention has relieved 3,8% of underage at risk of poverty in 2010, but this data is far from countries like UK (14,%), French (13,5%) or Germany (11,1%).

It is not only the family’s income to define the poverty condition of the children, yet it is critical to consider the network of opportunity and services that guarantee a healthy child growth, such as kindergartens, good quality schools, and other elements (for instance, favourable playground in cities). Data to proof the inefficiency of poverty relive to children can be shown by the usage of public Kindergarten by children between 0 and 2 years old, that differs widely by regions: from Emilia Romagna (28,5%), Umbria (27,7%), Valle d’Aosta (25,4%), to Calabria (3,5%), and Campagna (2,7%).

In conclusion, there is an urgency to stop this trend by launching a plan at a national level to fight the underage poverty, focusing more on the southern regions of Italy. Firstly, it will be adequate to adapt to the European trend of public spending dedicated to the youth, from the actual 1,3% to the 2% of the GDP as the goal for 2020. The redirection of the public spending determinates a sustainable source of resources without the necessity to raise taxes to provide more state income. The fiscal resources will be used to implement tax relief for parents with dependent children, vouchers to guarantee the purchase of essential products, develop the services to additionally support parenthood, and a special investment plan for the creation of kindergartens.  Moreover, guarantee funds should be created to support entrepreneur mothers to facilitate the credit access. Finally, any new legislative measure will have to validate also in terms of the childhood impact. These policies aim to improve the life of the families in general and create the most sure-fire route out of poverty for 300.000 kids.

 

Michele Beretta


Can new evidence concerning the long-term economic effects of moving out of bad neighbourhoods be used to mitigate long-term economic effects of the current migration movements towards Europe?

The neighbourhood in which children grow up is believed to influence economic success later in life. However, selection biases in efforts to measure the effects of bad neighbourhoods on poverty or economic success later in life led to difficulties in proving the causality for these disadvantages. Recent research by Eric Chyn reveals that the positive impact on the long run economic success of children moving out of disadvantaged neighbourhoods might have been underestimated in the past due to selection biases of participants in previous research. Thereby in previous research, the ‘Moving to Opportunity’ experiment, the participants were selected through a lottery in which prospective participants from disadvantaged neighbourhoods could voluntarily sign up to. However, whilst the experiment gave evidence to the positive effects of moving out of disadvantaged neighbourhoods at an early age, it is assumed to underestimate the effect. Thereby Mr Chyn and others argue that the participants that signed up might have had higher aspirations and were more concerned about moving out of bad neighbourhoods compared to people who did not sign up for the lottery, thus they might have done better even without taking part in the program. However, these selection biases can be countered if the participants would be selected randomly. The research by Eric Chyn achieves that as it is based on a sample of participants that were randomly selected. From 1995 to 1998 the Chicago Housing Authority demolished several public housing buildings due to structural damage but other public housing buildings in the area were left standing, thus people from the demolished buildings were relocated and families in the remaining buildings remained living in them. The people who remained living in the public housing are therefore constituting the control group. The relocated families received housing vouchers to find accommodation on the private housing market. These vouchers are a subsidy to cover the difference between rents on the private market and the family’s required rent contribution (30 percent of adjusted income). Since the people were selected based on whether their house was to be demolished or not it can be viewed as a random selection of participants, thus avoiding the selection bias problem of previous research. The results of Mr Chyn’s research are “that children displaced by public housing demolition have notably better adult labor market outcomes compared to their non-displaced peers”. Furthermore, these findings contrast the findings from the Moving to Opportunity project in such a way that the positive effects were observable irrespective of the age when the child moved.

Since Europe is currently faced with a vast influx of migrants coming to the European Union these recent findings might be helpful when thinking about possible ways to accommodate migrants within the European countries to achieve mutual economic gains for the migrants as well as for the receiving countries too._88578067_europe_migrant_numbers_mar2016

 

Whilst currently challenges still resolve around solving the humanitarian emergencies on a short-term basis it might be important to also develop plans for the long-run. Given the potential positive impact of migration for the receiving countries in the long-run, a successful integration and transition process will be important. Thereby the insights gathered from Mr. Chyn’s research regarding the positive impact of dispersing poorer households among less poor mixed neighbourhoods might also be applicable to placing migrants within less poor neighbourhoods. This could help to aid the integration process as well as help migrants to economically fair better in the long-run, thus reducing costs on social systems as well as generating tax revenues. Furthermore, if migrants are more dispersed within society this could also help to increase acceptance of migrants among the population of the receiving countries. However, this hypothesis concerning altered acceptance among residents in the receiving population might need further investigation and might also vary among different countries.

by Jonas Weber


Poverty and Social Exclusion in the UK

The 10th October 2012,

Each year, the New Policy Institute monitors poverty and social exclusion in the UK. Thanks to that, they were able to make a great estimation of the impacts of the crisis of 2008 and 2009 on poverty in the UK. In order to implement their survey, they analysed several predefined indicators: income, the unemployment rate, education,  health, and fear of crime. Statistics on these indicators are computed every year which allowed them to establish a good follow up of the evolution of poverty.

Let’s start by analyzing the number of people who are considered low income earners, that is, the people that earn less that 60% of the median income of the UK. Actually, if we compare to the situation at the beginning of the century, there are less people living in poverty. Unfortunately, the New Policy Institute also notices that since 2005, the situation has gone worst. Indeed from 2005 until 2010 the number of low-income households has increased. Therefore, at the end of 2009, 13.1 million people were living in poverty in the UK.

As far as the unemployment is concerned, the figures are also not good at all. In 2009, 2.5 million people were unemployed: the highest level since 1995. However even if the crisis emphasized the growth, we can notice that the increase in unemployment started in 2004: four years before the crisis.

Now let’s have a look at the place of child poverty in the UK. As the number of low-income households has increased, so did the number of children living in low-income households. Nevertheless, the number of children living in a non working family has decreased  continuously since 2004.

Regarding education, the figures are better. Indeed, the number of pupils not achieving 5 GCSEs (the equivalent of high school) has dropped by one third since 2004. Besides, we can also notice a decrease in children who do not have the basic knowledge in Mathematics and English at the age of 11.

Besides, as far as heath is concerned, we can also see some regular improvement, the number of premature deaths before age 65 has also reduced inthe last decades. The numbers of mental illnesses, infant mortality, babies born with low birth weight have also dropped.

People feel also more secure. Indeed, the percentage of people who feel worried about being victim of violent crime has gone from 17% to 14% since 2005. We observe the same thing for the people worried of being burgled.

To conclude, I think the crisis had a really bad effect on poverty. Indeed, the priorities of governments changed and poverty became a secondary issue. However, the report published by the New Policy Institute shows that some indicators started to get worst way before the recession. That is why I think that we should maybe look further in the past to find what problems are at the origin of the increase in poverty.

Jérôme Lucchese

Source:            http://www.poverty.org.uk/summary/reports.shtml


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