Title
Contents
Acknowledgements 14
The Authors 15
Glossary 16
Summary 18
1. Introduction, motivation, policy background 28
1.1 Measuring child poverty 29
1.2 Children in self-employed families 30
1.3 Why might income and other measures of living standards give different impressions of a household's well-being? 31
1.4 How does this study relate to the existing literature? 34
1.5 The rest of the report 35
2. Previous literature 36
2.1 Using consumption or food's budget share to measure living standards 36
2.2 Constructing and using material deprivation indices to measure well-being 38
3. Data and methods 40
3.1 The datasets 40
3.2 Measuring disposable income 41
3.3 Defining the work status of the family 43
3.4 Other measures of living standards 44
3.4.1 Material deprivation and financial assets (FRS) 45
3.4.2 Non-durables spending and food's budget share (FES/EFS) 45
3.4.3 Indices of living standards (FACS, BHPS) 46
4. The income distribution and the risk of low income for children in families of different work states 57
4.1 The income distribution for children according to their work status 58
4.2 The poverty risk for children according to their work status 58
4.3 Children in households with extremely low incomes 59
5. Living standards and income: do children from households with the lowest income have the lowest living standards? 81
5.1 An overview of the relationship between income and living standards 82
5.2 An overview of the relationship between poverty and hardship 85
6. Living standards, income and work status: are living standards different for children in self-employed families? 101
6.1 Living standards by income and work status 102
6.2 Predicted living standards given income by work status 104
6.3 Tables of low living standards by poverty status and work status 106
7. Dynamics of work, poverty and living standards 131
7.1 The prevalence of long-term poverty and hardship 132
7.2 Work, poverty and hardship dynamics over three years 133
7.2.1 Work dynamics 133
7.2.2 Poverty and hardship dynamics 134
7.2.3 The relationships between work dynamics and poverty and hardship dynamics 134
7.2.4 Hardship dynamics conditional on work dynamics and poverty dynamics 135
7.3 How transitory are poverty and hardship? 136
7.4 Does the risk of hardship depend upon the duration of poverty? 138
8. Which children are more likely to live in a household with a low income, and which children are more likely to live in a household with a low living standard? 164
8.1 Family type and economic status 165
8.2 Number and age of youngest child 166
8.3 Parental education 167
8.4 Ethnicity 168
9. Are the risk factors for hardship different from those for poverty? Do the risk factors for hardship change when accounting for income and past income? 198
9.1 What are the risk factors for being in poverty? 201
9.2 What are the risk factors for hardship? 202
9.3 Which characteristics have opposite effects on the risk of being in poverty and the risk of being in hardship? 206
9.4 What are the risk factors for being in joint poverty and hardship? 207
9.5 What are the risk factors for being in long-term poverty and/or long-term hardship? 208
10. Conclusions and policy implications 218
10.1 Findings 219
10.1.1 Do children from households with the lowest incomes have the lowest living standards? 219
10.1.2 Are living standards different for children in self-employed families? 219
10.1.3 Which children are more likely to live in a household with a relative low income, and which children are more likely to live in a household with a low living standard? 220
10.1.4 Dynamics of work, poverty and living standards 222
10.1.5 What might cause the differences between income and other measures of living standards for some types of households? 223
10.2 Remaining puzzles 226
10.3 Policy implications and recommendations 227
10.4 Implications for future research and the design of surveys 228
Appendix A. Data 229
A.1 Survey statistics 229
A.2 The BHPS sample 230
A.3 Construction of the hardship measures from FACS and BHPS 233
Appendix B. Measuring self-employment income 235
B.1 Self-employment income in FRS 235
B.2 Self-employment income in FES/EFS 235
B.3 Self-employment income in FACS 236
B.4 Self-employment income in BHPS 237
Appendix C. Using Engel curves to estimate under-reporting of income in household surveys 238
References 241
Table 3.1 Median income and poverty thresholds measured in unequivalised income for various family types, 2006/07 42
Table 3.2 Living standards and hardship measures (FRS), 2004/05 to 2006/07 50
Table 3.3 Trends in the proportions of children in hardship (FRS), 2004/05 to 2006/07 51
Table 3.4 Distribution of non-durables spending amongst children (FES/EFS), 1996/97 to 2006 51
Table 3.5 Trends in the proportions of children in spending hardship (FES/EFS), 1996/97 to 2006 52
Table 3.6 Living standards and hardship measures (FACS), 2001 to 2006 53
Table 3.7 Living standards and hardship measures (BHPS), 1996 to 2006 55
Table 3.8 Trends in the proportions of children in hardship (FACS), 2001 to 2006 56
Table 3.9 Trends in the proportions of children in hardship (BHPS), 1996 to 2006 56
Table 4.1 Sample size and family work status of families with children with weekly income less than 50 (all surveys) 80
Table 5.1 Value of household incomes as a proportion of median income and proportion of children living in households with incomes less than these values 83
Table 5.2 Proportions of children in poverty and hardship (all surveys) 98
Table 5.3 Material deprivation, by income group (FRS), 2004/05 to 2006/07 99
Table 5.4 Relative spending by income group (EFS), 2001/02 to 2006 99
Table 5.5 Hardship, by income group (FACS), 2001 to 2006 100
Table 5.6 Hardship by income group (BHPS), 1996 to 2006 100
Table 6.1 Relative spending, by income group and work status (EFS), 2001/02 to 2006 127
Table 6.2 Material deprivation, by income group and work status (FRS), 2004/05 to 2006/07 128
Table 6.3 Hardship, by income group and work status (FACS), 2001 to 2006 129
Table 6.4 Hardship, by income group and work status (BHPS), 1996 to 2006 130
Table 7.1 Proportions of children in current and long-term poverty and hardship (FACS), 2003 to 2006 139
Table 7.2 Proportions of children in current and long-term poverty and hardship (BHPS), 2003 to 2006 140
Table 7.3 Work dynamics, by current work status (FACS), 2003 to 2006 140
Table 7.4 Work dynamics, by current work status (BHPS), 1998 to 2006 141
Table 7.5 Poverty and hardship dynamics, by year (FACS), 2003 to 2006 142
Table 7.6 Poverty and hardship dynamics, by year (BHPS), 1998 to 2006 143
Table 7.7 Poverty and hardship dynamics, by work dynamics (FACS), 2003 to 2006 144
Table 7.8 Poverty and hardship dynamics, by work dynamics (BHPS), 1998 to 2006 145
Table 7.9 Proportions of children never in hardship, by poverty experience (FACS), 2003 to 2006 154
Table 7.10 Proportions of children never in hardship, by poverty experience (BHPS), 1998 to 2006 155
Table 7.11 Proportions of child poverty and hardship which are transitory, by year (FACS), 2003 to 2006 155
Table 7.12 Proportions of child poverty and hardship which are transitory, by year (BHPS), 1998 to 2006 155
Table 7.13 Proportions of child poverty and hardship which are transitory, by work status (FACS), 2003 to 2006 156
Table 7.14 Proportions of child poverty and hardship which are transitory, by work status (BHPS), 1998 to 2006 156
Table 8.1 Composition of children in poverty and hardship, by family type and work status (EFS), 2001/02 to 2006 168
Table 8.2 Composition of children in poverty and hardship, by family type and work status (FRS), 2004/05 to 2006/07 169
Table 8.3 Composition of children in poverty and hardship, by family type and work status (FACS), 2001 to 2006 170
Table 8.4 Composition of children in poverty and hardship, by family type and work status (BHPS), 1996 to 2006 172
Table 8.5 Composition of children in long-term poverty and hardship, by family type and work status (FACS), 2003 to 2006 174
Table 8.6 Composition of children in long-term poverty and hardship, by family type and work status (BHPS), 1998 to 2006 176
Table 8.7 Composition of children in poverty and hardship, by number of children in the family (EFS), 2001/02 to 2006 178
Table 8.8 Composition of children in poverty and hardship, by number of children in the family (FRS), 2004/05 to 2006/07 178
Table 8.9 Composition of children in poverty and hardship, by number of children in the family (FACS), 2001 to 2006 179
Table 8.10 Composition of children in poverty and hardship, by number of children in the family (BHPS), 1996 to 2006 180
Table 8.11 Composition of children in long-term poverty and hardship, by number of children in the family (FACS), 2003 to 2006 181
Table 8.12 Composition of children in long-term poverty and hardship, by number of children in the family (BHPS), 1998 to 2006 182
Table 8.13 Composition of children in poverty and hardship, by age of youngest child in the family (EFS), 2001/02 to 2006 183
Table 8.14 Composition of children in poverty and hardship, by age of youngest child in the family (FRS), 2004/05 to 2006/07 183
Table 8.15 Composition of children in poverty and hardship, by age of youngest child in the family (FACS), 2001 to 2006 184
Table 8.16 Composition of children in poverty and hardship, by age of youngest child in the family (BHPS), 1996 to 2006 185
Table 8.17 Composition of children in long-term poverty and hardship, by age of youngest child in the family (FACS), 2003 to 2006 186
Table 8.18 Composition of children in long-term poverty and hardship, by age of youngest child in the family (BHPS), 1998 to 2006 187
Table 8.19 Composition of children in poverty and hardship, by parental education (EFS), 2001/02 to 2006 188
Table 8.20 Composition of children in poverty and hardship, by parental education (FRS), 2004/05 to 2006/07 188
Table 8.21 Composition of children in poverty and hardship, by parental education (FACS), 2001 to 2006 189
Table 8.22 Composition of children in poverty and hardship, by parental education (BHPS), 1996 to 2006 190
Table 8.23 Composition of children in long-term poverty and hardship, by parental education (FACS), 2003 to 2006 191
Table 8.24 Composition of children in long-term poverty and hardship, by parental education (BHPS), 1998 to 2006 192
Table 8.25 Composition of children in poverty and hardship, by ethnicity (EFS), 2001/02 to 2006 193
Table 8.26 Composition of children in poverty and hardship, by ethnicity (FRS), 2004/05 to 2006/07 193
Table 8.27 Composition of children in poverty and hardship, by ethnicity (FACS), 2001 to 2006 194
Table 8.28 Composition of children in poverty and hardship, by ethnicity (BHPS), 1996 to 2006 195
Table 8.29 Composition of children in long-term poverty and hardship, by ethnicity (FACS), 2003 to 2006 196
Table 8.30 Composition of children in long-term poverty and hardship, by ethnicity (BHPS), 1998 to 2006 197
Table 9.1 Impact of family characteristics on the risk of poverty for families with children 211
Table 9.2 Impact of family characteristics on the risk of hardship for families with children 212
Table 9.3 Impact of family characteristics on the risk of joint poverty and hardship for families with children 214
Table 9.4 Impact of family characteristics on the risk of long-term poverty and hardship for families with children 216
Table 9.5 Impact of family characteristics on the risk of long-term joint poverty and hardship for families with children 217
Table A.1 Summary of datasets 229
Table A.2 Sample sizes, by year 230
Table A.3 Sample statistics for FACS and BHPS 231
Figure 1. Distribution of material deprivation by L25 income bands, 2004/05 to 2006/07 21
Figure 2. Average level of material deprivation by L25 income bands and family work status, 2004/05 to 2006/07 22
Figure 1.1 Risk of poverty for all children and children in self-employed families 30
Figure 3.1 Comparing the income distribution for children across surveys, 2006/07 43
Figure 3.2 Trends in the proportions of children living in families of different work status (FRS), 1996/97 to 2006/07 46
Figure 3.3 Trends in the proportions of children living in families of different work status (FES/EFS), 1996/97 to 2006 47
Figure 3.4 Trends in the proportions of children living in families of different work status (FACS), 2001 to 2006 48
Figure 3.5 Trends in the proportions of children living in families of different work status (BHPS), 1996 to 2006 49
Figure 4.1 Income distribution of children in families of different work status (FRS), 2001/02 to 2006/07 60
Figure 4.2 Income distribution of children in families of different work status (EFS), 2001/02 to 2006 61
Figure 4.3 Income distribution of children in families of different work status (FACS), 2001 to 2006 62
Figure 4.4 Income distribution of children in families of different work status (BHPS), 2001 to 2006 63
Figure 4.5 Trends in the proportions of all children with different categories of incomes (FRS), 1996/97 to 2006/07 64
Figure 4.6 Trends in the proportions of all children with different categories of incomes, (FES/EFS), 1996/97 to 2006 65
Figure 4.7 Trends in the proportions of all children with different categories of incomes (FACS), 2001 to 2006 66
Figure 4.8 Trends in the proportions of all children with different categories of incomes (BHPS), 1996 to 2006 67
Figure 4.9 Proportions of children in employed families with different categories of incomes (FRS), 1996/97 to 2006/07 68
Figure 4.10 Proportions of children in employed families with different categories of incomes (FES/EFS), 1996/97 to 2006 69
Figure 4.11 Proportions of children in employed families with different categories of incomes (FACS), 2001 to 2006 70
Figure 4.12 Proportions of children in employed families with different categories of incomes (BHPS), 1996 to 2006 71
Figure 4.13 Proportions of children in self-employed families with different categories of incomes (FRS), 1996/97 to 2006/07 72
Figure 4.14 Proportions of children in self-employed families with different categories of incomes (FES/EFS), 1996/97 to 2006 73
Figure 4.15 Proportions of children in self-employed families with different categories of incomes (FACS), 2001 to 2006 74
Figure 4.16 Proportions of children in self-employed families with different categories of incomes (BHPS), 1996 to 2006 75
Figure 4.17 Proportions of children in workless families with different categories of incomes (FRS), 1996/97 to 2006/07 76
Figure 4.18 Proportions of children in workless families with different categories of incomes (FES/EFS), 1996/97 to 2006 77
Figure 4.19 Proportions of children in workless families with different categories of incomes (FACS), 2001 to 2006 78
Figure 4.20 Proportions of children in workless families with different categories of incomes (BHPS), 1996 to 2006 79
Figure 5.1 Distribution of material deprivation by L25 income bands (FRS), 2004/05 to 2006/07 86
Figure 5.2 Distribution of financial assets by L25 income bands (FRS), 2004/05 to 2006/07 87
Figure 5.3 Distribution of non-durables spending by L50 income bands (EFS), 2001/02 to 2006 87
Figure 5.4 Distribution of food's budget share by L50 income bands (EFS), 2001/02 to 2006 88
Figure 5.5 Distribution of daily living deprivation by L25 income bands (FACS), 2001 to 2005 89
Figure 5.6 Distribution of daily living deprivation by L25 past income bands (FACS), 2003 to 2005 89
Figure 5.7 Distribution of daily living deprivation by L25 income bands (BHPS), 1996 to 2006 90
Figure 5.8 Distribution of daily living deprivation by L25 past income bands (BHPS), 1998 to 2006 90
Figure 5.9 Distribution of consumer durable deprivation by L25 income bands (FACS), 2001 to 2005 91
Figure 5.10 Distribution of consumer durable deprivation by L25 past income bands (FACS), 2003 to 2005 91
Figure 5.11 Distribution of lack of consumer durables by L25 income bands (BHPS), 1996 to 2006 92
Figure 5.12 Distribution of lack of consumer durables by L25 past income bands (BHPS), 1998 to 2006 92
Figure 5.13 Average incidence of poor housing conditions by L25 income bands (FACS), 2001 to 2006 93
Figure 5.14 Average incidence of poor housing conditions by L25 past income bands (FACS), 2003 to 2006 93
Figure 5.15 Average incidence of poor housing conditions by L25 income bands (BHPS), 1996 to 2006 94
Figure 5.16 Average incidence of poor housing conditions by L25 past income bands (BHPS), 1998 to 2006 94
Figure 5.17 Average incidence of problem debts by L25 income bands (FACS), 2001 to 2006 95
Figure 5.18 Average incidence of problem debts by L25 past income bands (FACS), 2003 to 2006 95
Figure 5.19 Average incidence of financial difficulties by L25 income bands (FACS), 2001 to 2006 96
Figure 5.20 Average incidence of financial difficulties by L25 past income bands (FACS), 2003 to 2006 96
Figure 5.21 Average incidence of financial difficulties by L25 income bands (BHPS), 1996 to 2006 97
Figure 5.22 Average incidence of financial difficulties by L25 past income bands (BHPS), 1998 to 2006 97
Figure 6.1 Average level of material deprivation by L25 income bands and family work status (FRS), 2004/05 to 2006/07 108
Figure 6.2 Average level of financial assets by L25 income bands and family work status (FRS), 2004/05 to 2006/07 108
Figure 6.3 Average level of non-durables spending by L50 income bands and family work status (EFS), 2001/02 to 2006 109
Figure 6.4 Average level of food budget share by L50 income bands and family work status (EFS), 2001/02 to 2006 109
Figure 6.5 Average level of daily living deprivation by L25 income bands and family work status (FACS), 2001 to 2005 110
Figure 6.6 Average level of daily living deprivation by L25 income bands and family work status (BHPS), 1996 to 2006 111
Figure 6.7 Average level of consumer durable deprivation by L25 income bands and family work status (FACS), 2001 to 2005 112
Figure 6.8 Average lack of consumer durables by L25 income bands and family work status (BHPS), 1996 to 2006 113
Figure 6.9 Average level of housing problems by L25 income bands and family work status (FACS), 2001 to 2006 114
Figure 6.10 Average level of housing problems by L25 income bands and family work status (BHPS), 1996 to 2006 114
Figure 6.11 Average level of problem debts by L25 income bands and family work status (FACS), 2001 to 2006 115
Figure 6.12 Average extent of financial difficulties by L25 income bands and family work status (FACS), 2001 to 2006 115
Figure 6.13 Average extent of financial difficulties by L25 income bands and family work status (BHPS), 1996 to 2006 116
Figure 6.14 Predicted level of material deprivation by income and family work status (FRS), 2004/5 to 2006/7 116
Figure 6.15 Predicted level of non-durables spending by income and family work status (FES), 2001/2 to 2006 117
Figure 6.16 Predicted level of daily living deprivation by family work status (FACS), 2001 to 2005 118
Figure 6.17 Predicted level of daily living deprivation by family work status (BHPS), 1996 to 2006 119
Figure 6.18 Predicted level of consumer durable deprivation by family work status (FACS), 2001 to 2005 120
Figure 6.19 Predicted level of lack of consumer durables by family work status (BHPS), 1996 to 2006 121
Figure 6.20 Predicted level of poor housing conditions by family work status (FACS), 2001 to 2006 122
Figure 6.21 Predicted level of poor housing conditions by family work status (BHPS), 1996 to 2006 123
Figure 6.22 Predicted level of problem debt by family work status (FACS), 2001 to 2006 124
Figure 6.23 Predicted extent of financial difficulties by family work status (FACS), 2001 to 2006 125
Figure 6.24 Predicted extent of financial difficulties by family work status (BHPS), 1996 to 2006 126
Figure 7.1 Daily living hardship dynamics by work and poverty dynamics (FACS), 2003 to 2005 146
Figure 7.2 Daily living hardship dynamics by work and poverty dynamics (BHPS), 1998 to 2006 147
Figure 7.3 Consumer durable hardship dynamics by work and poverty dynamics (FACS), 2003 to 2005 148
Figure 7.4 Consumer durable hardship dynamics by work and poverty dynamics (BHPS), 1998 to 2006 149
Figure 7.5 Housing conditions hardship dynamics by work and poverty dynamics (FACS), 2003 to 2006 150
Figure 7.6 Housing conditions hardship dynamics by work and poverty dynamics (BHPS), 1998 to 2006 151
Figure 7.7 Problem debt hardship dynamics by work and poverty dynamics (FACS), 2003 to 2006 152
Figure 7.8 Financial difficulties hardship dynamics by work and poverty dynamics (FACS), 2003 to 2006 153
Figure 7.9 Financial difficulties hardship dynamics by work and poverty dynamics (BHPS), 1998 to 2006 154
Figure 7.10 Daily living hardship by poverty duration and work dynamics (FACS), 2003 to 2005 157
Figure 7.11 Daily living hardship by poverty duration and work dynamics (BHPS), 1998 to 2006 157
Figure 7.12 Consumer durables hardship by poverty duration and work dynamics (FACS), 2003 to 2005 158
Figure 7.13 Consumer durables hardship by poverty duration and work dynamics (BHPS), 1998 to 2006 159
Figure 7.14 Housing conditions hardship by poverty duration and work dynamics (FACS), 2003 to 2006 159
Figure 7.15 Housing conditions hardship by poverty duration and work dynamics (BHPS), 1998 to 2006 160
Figure 7.16 Problem debt hardship by poverty duration and work dynamics (FACS), 2003 to 2006 161
Figure 7.17 Financial difficulties hardship by poverty duration and work dynamics (FACS), 2003 to 2006 162
Figure 7.18 Financial difficulties hardship by poverty duration and work dynamics (BHPS), 1998 to 2006 163
Boxes
Box 5.1 Interpreting values of weekly equivalised income 83
Box 9.1 Methodology 200