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


Urban Poverty in Portugal – An (In)visible Reality

Where do the poor people live in Portugal? The obvious answer is in rural areas.

In the past, poor people were always visible in the public life and on the streets of the cities and villages, however Portugal has been since centuries a country of migration from rural to urban areas. For example, in the last 10 years (2001-2011), there were an increase in population living in Lisbon of 159 849 habitants (INE, Censos 2011). Cities became manufacturing centers with more availability of facilities, offering more job opportunities than villages. Nonetheless, poverty is nowadays an increasing reality in urban areas, as Lisbon and Porto rather that in rural areas (AMI, 2010).

Unavailability of employment in rural villages has resulted in an influx of people in search of jobs in towns, from people looking for a better standard of living. The population living in Lisbon increased 6.01% in the last 10 years (INE, Censos 2011). Additionally, the lack of school education is an important issue since it is the main method of obtaining urban employment. Despite the huge growth in education in Portugal between 1960 and 2008, INE data shows that Portugal is exactly in the same starting point of 50 years ago (ionline, 2010).

Who are the poor in Portugal? Only the homeless who we witness everyday sleeping on the streets? They are long-term unemployed or young people looking for their first job, single parent families, certain ethnic minorities and especially disabled and elderly people with insufficient resources to ensure a standard of living above the poverty line (Amnesty International, 2009).

Urban poverty affects directly 1/3 of urban population in Portugal, but it also has high invaluable indirect impacts felt by all society. The metropolitan areas of Lisbon and Porto are the areas most affected by poverty and social exclusion. There were 12 300 people supported by AMI in 2010, which represents 45% in Lisbon and 40% in Porto (AMI, 2010).

What can be done? First, to overcome urban poverty a possible solution is to control rural poverty aligned with the control over influx to cities, by developing better survival opportunity in villages. The education system needs to be job-oriented in rural and urban areas. Encourage set up of small industries (pollution free) in rural villages that can create jobs and at the same time, discourage industries in urban cities to control population flows.

In my opinion, there is a huge number of hidden population that is poor, because of shame. These families could be helped and then start having better conditions of life if they look for social help and support from any of all social institutions that exists, rather that live in secret.

But is the ability to respond to the challenge of eradicating poverty and providing basic needs sufficient to promote the viability of urban centers?

 by Rita Loução de Almeida 

 

References:

Censos 2011, INE: http://censos.ine.pt/xportal/xmain?xpid=CENSOS&xpgid=censos2011_apresentacao

AMI: http://ami.blogs.sapo.pt/53247.html

Online newspaper: http://www1.ionline.pt/conteudo/42939-ensino-portugal-esta-no-mesmo-ponto-partida-ha-50-anos

Amnisty International: http://www.amnistia-internacional.pt/files/Relatoriosvarios/RelatorioPobreza_com_indice.pdf