Title
Contents
Acknowledgements 8
The Authors 9
Glossary 10
Summary 12
1. Introduction 16
2. Labour market status, in-work support and the economic circumstances of families with children 18
2.1 Labour market participation of families with children 18
2.2 The role of in-work support 20
2.2.1 WFTC 21
2.2.2 WTC and CTC 21
2.3 Employment rates, income poverty and hardship: FACS 2005 22
2.3.1 Employment status 23
2.3.2 Receipt of WTC 24
2.3.3 Income poverty 27
2.3.4 Living standards hardship 31
2.4 Summary 37
3. The impact of moving into work on income and living standards 39
3.1 The impact on income and living standards in the first year following a move into work 40
3.1.1 Movements into work and in-work support 43
3.1.2 Changes in income 44
3.1.3 Changes in living standards 47
3.1.4 The factors that influence the improvements to income and living standards 50
3.2 The impact on income and living standards two years after a move into work 53
3.2.1 Movements into work and in-work support 54
3.2.2 Changes in income 56
3.2.3 Changes in living standards 58
3.2.4 The factors that influence improvements to income and living standards 60
3.3 Summary 62
4. The impact of moving out of work on income and living standards 64
4.1 The impact on income and living standards in the first year following a move out of work 64
4.1.1 Movements out of work 66
4.1.2 Changes in income 67
4.1.3 Changes in living standards 68
4.1.4 The factors that influence movements into income poverty and living standards hardship 71
4.2 The impact on income and living standards two years after a move out of work 73
4.2.1 Changes in income 75
4.2.2 Changes in living standards 77
4.2.3 The factors that may increase the risk of families falling into income poverty and living standards hardship 79
4.3 Summary 80
5. Summary and conclusions 82
5.1 Main findings 82
5.1.1 Labour market status, in-work support and economic circumstances of families with children 82
5.1.2 The impact of moving into work on income poverty 83
5.1.3 The impact of moving into work on hardship 83
5.1.4 The factors that influenced improvements to income and living standards 84
5.1.5 The impact of moving out of work on income and living standards 84
5.1.6 The factors that influenced movements into income poverty and living standards hardship 85
5.2 Conclusions 85
Appendix A. The modified OECD equivalence scale 87
Appendix B. Logistic regression coefficient tables 88
References 99
Table 2.1 Specific living standards hardship rates for families receiving Working Tax Credit by family work status, FACS 2005 36
Table 2.2 Combined income poverty and hardship rates for families receiving WTC by family work status, FACS 2005 36
Table 3.1 The impact of transitions into work and in-work tax credit receipt on income poverty exit, one-year transitions from FACS 2001-2005, income poverty exit rate 47
Table 3.2 The impact of transitions into work and in-work tax credit receipt on hardship exit, one-year transitions from FACS 2001-2005: hardship exit rate 49
Table A.1 Equivalence scale values (BHC) 87
Table B.1 Factors associated with families moving out of income poverty over one year 89
Table B.2 Factors associated with families moving out of living standards hardship over one year 90
Table B.3 Factors associated with families moving into income poverty over one year 91
Table B.4 Factors associated with families moving into living standards hardship over one year 93
Table B.5 Factors associated with families moving out of income poverty over two years 95
Table B.6 Factors associated with families moving out of living standards hardship over two years 96
Table B.7 Factors associated with families moving into income poverty over two years 97
Table B.8 Factors associated with families moving into living standards hardship over two years 98
Figure 2.1 Family work status, FACS 2005 24
Figure 2.2 Receipt of Working Tax Credit, FACS 2005 25
Figure 2.3 Weekly amount of tax credits received by families in receipt of Working Tax Credit, FACS 2005 26
Figure 2.4 Risk of being income poor by family work status, FACS 2005 29
Figure 2.5 Income poverty status according to work status for families in receipt of Working Tax Credit, FACS 2005 30
Figure 2.6 Living standards hardship by family work status, FACS 2005 34
Figure 2.7 Living standards hardship according to work status for families in receipt of Working Tax Credit, FACS 2005 35
Figure 3.1 Labour market and in-work tax credit transitions 41
Figure 3.2 Movements into work and receipt of in-work tax credits, one-year transitions from FACS 2001-2005 44
Figure 3.3 The impact of transitions into work and in-work tax credit receipt on income poverty dynamics, lone parent families, one-year transitions from FACS 2001-2005 45
Figure 3.4 The impact of transitions into work and in-work tax credit receipt on income poverty dynamics, couple families, one-year transitions from FACS 2001-2005 46
Figure 3.5 The impact of transitions into work and in-work tax credit receipt on hardship dynamics, lone parent families, one-year transitions from FACS 2001-2005 47
Figure 3.6 The impact of transitions into work and in-work tax credit receipt on hardship dynamics, couple families, one-year transitions from FACS 2001-2005 48
Figure 3.7 Factors associated with a movement out of income poverty and severe living standards hardship over one year 52
Figure 3.8 Labour market transitions 54
Figure 3.9 Movements into work and receipt of in-work tax credits, two-year transitions from FACS 2001-2005 55
Figure 3.10 Changes in income poverty status following a move into work, lone parent families in three consecutive waves of FACS 2001-2005 56
Figure 3.11 Changes in income poverty status following a move into work, couple families in three consecutive waves of FACS 2001-2005 57
Figure 3.12 Changes in living standards hardship status following a move into work, lone parent families in three consecutive waves of FACS 2001-2005 59
Figure 3.13 Changes in living standards hardship status following a move into work, couple families in three consecutive waves of FACS 2001-2005 60
Figure 3.14 Factors associated with a movement out of income poverty and severe living standards hardship over two years 61
Figure 4.1 Labour market and in-work tax credit transitions 65
Figure 4.2 Movements out of work and receipt of in-work tax credits, one-year transitions from FACS 2001-2005 66
Figure 4.3 The impact of transitions out of work and in-work tax credit receipt on income poverty dynamics, lone parent families, one-year transitions from FACS 2001-2005 67
Figure 4.4 The impact of transitions out of work and in-work tax credit receipt on income poverty dynamics, couple families, one-year transitions from FACS 2001-2005 68
Figure 4.5 The impact of transitions out of work and in-work tax credit receipt on hardship dynamics, lone parent families, one-year transitions from FACS 2001-2005 69
Figure 4.6 The impact of transitions out of work and in-work tax credit receipt on hardship dynamics, couple families, one-year transitions from FACS 2001-2005 70
Figure 4.7 Factors associated with a movement into income poverty and severe living standards hardship over one year 72
Figure 4.8 Labour market transitions 73
Figure 4.9 Movements out of work and receipt of in-work tax credits, two-year transitions from FACS 2001-2005 74
Figure 4.10 Changes in income poverty status following a move out of work, lone parent families in three consecutive waves of FACS 2001-2005 75
Figure 4.11 Changes in income poverty status following a move out of work, couple families in three consecutive waves of FACS 2001-2005 76
Figure 4.12 Changes in living standards hardship status following a move out of work, lone parent families in three consecutive waves of FACS 2001-2005 77
Figure 4.13 Changes in living standards hardship status following a move out of work, couple families in three consecutive waves of FACS 2001-2005 78
Figure 4.14 Factors associated with a move into income poverty and severe living standards hardship over two years 79
Boxes
Methodology box 2.1 - The Families and Children Study (FACS) 23
Methodology box 2.2 - Measuring income in FACS 27
Methodology box 2.3 - Defining living standards hardship in FACS 31
Methodology box 3.1 - Utilising the longitudinal element of FACS 39
Methodology box 3.2 - Comparing the receipt and amount of in-work tax credits over time 42
Methodology box 3.3 - Logistic regression analysis 50