Shooting at moving targets: short versus longterm effects of antipoverty policies

1
Shooting at moving targets short versus
long-term effects of anti-poverty policies

• Rembert de BlanderIdes NicaiseHIVA, K.U.Leuven

Research funded by the Belgian Science Policy
Office
2

• Introduction

3

• Poverty research increasing emphasis on
• Dynamics (processes of exclusion / inclusion)
• Multidimensionality (income, education, work)
• Societal choice three successive paradigms of
  the welfare state (traditional welfare state,
  active welfare state, knowledge-based society)
• Social inclusion policy(Luxembourg, June 2005)
• Need for microsimulation models

4

• 1. Model

5
Three states of social protection

• Poor
• Without MI ( IP, underprotected)
• With MI ( social assistance)
• Non-poor (NP)
• Note both poor and the non-poor individuals can
  be employed or draw social security benefits

6
Mobility matrix
7
Dynamics of poverty and employment

• Mobility between social protection states
• Mobility between work and non-work
• Combination gtwhere

8
Determinants of initial states and transition
hazards

• Socio-economic background (parental education,
  occupational status, religion, citizenship,
  region)
• Family composition (1- vs 2-adult household,
  children, other dependants)
• Individual characteristics (gender, age,
  education, health, urban / rural residence)
• Economic circumstances (GDP growth, unemployment)

9
Data

• PSBH (Belgian part of ECHP) 1993-1997with income
  variables transformed into monthly income
• Sub-sample of population in active age (no
  longer in full-time education and not yet retired)

10
Three-stage estimation

• Pure effect of policy variables education
  and activation must be disentangled from
  unobserved heterogeneity
• between qualified and non-qualified school
  leavers,
• between working and non-working individuals
• gt Bias is controled for by means of generalised
  residuals (Heckman control function) approach

11
(No Transcript)
12

• 2. Simulations

13
Strategy 1 full coverage by MI

• All persons in underprotection (IP) are lifted
  up to MI-level
• Hazard rate of outflow from poverty is affected
• Upwards more services
• Downwards poverty trap effect
• Results
• Poverty is alleviated by definition
• However, outflow hazard diminishes gt poverty
  rate remains 16 higher in steady state)

14
Strategy 1 full MI coverage
15
Strategy 2 activation

• All individuals in IP or MI get a work placement
  during 1 year
• 2 effects
• Short term (during programme) 18 less in
  poverty
• Long term (after programme) 4,5 less in poverty
  in steady state

16
Strategy 2 activation
17
Strategy 3 education

• Individuals with less than upper secondary
  education are lifted up to that level
• 2 variants
• All -25 year olds (youth variant) 5 less in
  poverty in steady state
• All -50 year old poor (learnfare variant) 17
  less in poverty in steady state

18
Strategy 3 education, youth variant
19
Strategy 3 education, learnfare variant
20

• 3. Conclusions

21
Comparison of simulations
Difference in steady state outcomes as a
percentage of initial poor
22
Policy implications

• Strong mobility gt high deadweight effect of
  any policy (although deadweight is partly
  attributable to effectiveness of pre-existing
  policies)gt Shooting at moving targets
• Full coverage by MI tends to alleviate poverty,
  but also to prolong it gt should be combined with
  activation
• Activation has strong effect in the short run,
  but small long-term effect
• Education (particularly the learnfare variant)
  has strongest long-term impact (knowledge-based
  society paradigm)

23
Possible improvements

• Panel-specification
• Updating of data base
• Other strategies / dimensions
• LLL
• Social security regulations
• Family policy
• Labour market regulation
• Health care
• Social / cultural capital
• Cost-benefit analysis