IWP15 - Income Inequality among Children.qxp_Layout 1 12/04/17 10:45 Pagina 1 Income InequaliTy among Children in Europe 2008–2013 Emilia Toczydlowska, YekaTerina Chzhen, ZlaTa Bruckauf and Sudhanshu Handa Office of Research - InnocenTi Working Paper WP-2016-15 | April 2016 IWP15 - Income Inequality among Children.qxp_Layout 1 12/04/17 10:45 Pagina 2 INNOCENTI WORKING PAPERS UNICEF Office of Research Working Papers are inTended To disseminaTe iniTial research conTribuTions wiThin The programme of work, addressing social, economic and insTiTuTional aspecTs of The realizaTion of The human righTs of children. The findings, inTerpreTaTions and conclusions expressed in This paper are Those of The auThors and do noT necessarily reflecT The policies or views of UNICEF. This paper has been peer reviewed boTh exTernally and wiThin UNICEF . The TexT has noT been ediTed To official publicaTions sTandards and UNICEF accepTs no responsibiliTy for errors. ExTracTs from This publicaTion may be freely reproduced wiTh due acknowledgemenT. RequesTs To uTilize larger porTions or The full publicaTion should be addressed To The CommunicaTion UniT aT [email protected]. For readers wishing To ciTe This documenT we suggesT The following form: Toczydlowska, E., Y. Chzhen, Z. Bruckauf and S. Handa (2016). Income InequaliTy among Children in Europe 2008–2013, Innocenti Working Paper No.2016-15, UNICEF Office of Research, Florence. © 2016 UniTed NaTions Children’s Fund (UNICEF) ISSN: 1014-7837 2 IWP15 - Income Inequality among Children.qxp_Layout 1 12/04/17 10:45 Pagina 3 THE UNICEF OFFICE OF RESEARCH – INNOCENTI In 1988 The UniTed NaTions Children’s Fund (UNICEF) esTablished a research cenTre To supporT iTs advocacy for children worldwide and To idenTify and research currenT and fuTure areas of UNICEF’s work. The prime objecTives of The Office of Research are To improve inTernaTional undersTanding of issues relaTing To children’s righTs and To help faciliTaTe full implemenTaTion of The ConvenTion on The RighTs of The Child in developing, middle-income and indusTrialized counTries. The Office aims To seT ouT a comprehensive framework for research and knowledge wiThin The organizaTion, in supporT of iTs global programmes and policies. Through sTrengThening research parTnerships wiTh leading academic insTiTuTions and developmenT neTworks in boTh The NorTh and SouTh, The Office seeks To leverage addiTional resources and influence in supporT of efforTs Towards policy reform in favour of children. PublicaTions produced by The Office are conTribuTions To a global debaTe on children and child righTs issues and include a wide range of opinions. For ThaT reason, some publicaTions may noT necessarily reflecT UNICEF policies or approaches on some Topics. The views expressed are Those of The auThors and/or ediTors and are published in order To sTimulaTe furTher dialogue on child righTs. The Office collaboraTes wiTh iTs hosT insTiTuTion in Florence, The IsTiTuTo degli InnocenTi, in selecTed areas of work. Core funding is provided by The GovernmenT of ITaly, while financial supporT for specific projecTs is also provided by oTher governmenTs, inTernaTional insTiTuTions and privaTe sources, including UNICEF NaTional CommiTTees. ExTracTs from This publicaTion may be freely reproduced wiTh due acknowledgemenT. RequesTs To TranslaTe The publicaTion in iTs enTireTy should be addressed To: CommunicaTions UniT, [email protected] . For furTher informaTion and To download or order This and oTher publicaTions, please visiT The websiTe aT www.unicef-irc.org . Correspondence should be addressed to: UNICEF Office of Research - InnocenTi Piazza SS. AnnunziaTa, 12 50122 Florence, ITaly Tel: (+39) 055 20 330 Fax: (+39) 055 2033 220 [email protected] www.unicef-irc.org @UNICEFInnocenTi facebook.com/UnicefOfficeofResearchInnocenTi 3 IWP15 - Income Inequality among Children.qxp_Layout 1 12/04/17 10:45 Pagina 4 INCOME INEQUALITY AMONG CHILDREN IN EUROPE 2008–2013 Emilia Toczydlowska 1 ([email protected]), YekaTerina Chzhen 2 ([email protected]), ZlaTa Bruckau f 3 ([email protected]) and Sudhanshu Handa 4 ([email protected]). 1 Social and Economic Policy ConsulTanT, UNICEF Office of Research - InnocenTi 2 Social and Economic Policy SpecialisT, UNICEF Office of Research - InnocenTi 3 Social and Economic Policy ConsulTanT, UNICEF Office of Research - InnocenTi 4 Chief of Social and Economic Policy UniT, UNICEF Office of Research - InnocenTi Abstract: WiTh income inequaliTy increasing and children exposed To higher risks of poverTy and maTerial deprivaTion Than The populaTion as a whole in The majoriTy of European counTries, There is a concern ThaT income inequaliTy among children has worsened over The financial crisis. This paper presenTs resulTs on The levels of boTTom-end inequaliTy in children’s incomes in 31 European counTries in 2013 and Traces The evoluTion of This measure since 2008. The relaTive income gap is measured as The difference beTween The median and The 10Th percenTile, expressed as a percenTage of The median. In 2013 iT ranged from 37% in Norway To 67% in Romania. The relaTive income gap worsened in 20 of The 31 European counTries beTween 2008 and 2013. The unequal growTh raTe in child income across The disTribuTion is a facTor conTribuTing To The increase in boTTom-end child income inequaliTy. BeTween 2008 and 2013 only Three counTries – The Czech Republic, Finland, and SwiTzerland – have managed To decrease The relaTive income gap beTween The average and The pooresT children as a resulT of The income of poor children rising fasTer in real Terms Than The income of a child aT The median. Social Transfers play a posiTive role in reducing income differenTials, as posT-Transfer income gaps are smaller Than Those before Transfers, especially in counTries like Ireland and The UniTed Kingdom. CounTries wiTh greaTer boTTom-end income inequaliTy among children have lower levels of child well-being, and higher levels of child poverTy and maTerial deprivaTion. They also have higher income inequaliTy overall, as measured by The Gini coefficienT. Keywords: income inequaliTy, child poverTy, relaTive income gap, child well-being Acknowledgements: The auThors would like To Thank JonaThan Bradshaw and Gill Main for Their helpful commenTs on an earlier drafT of This paper. Country Abbreviations AT AusTria FI Finland MT MalTa AU AusTralia FR France NL NeTherlands BE Belgium GR Greece NO Norway BG Bulgaria HR CroaTia PL Poland CA Canada HU Hungary PT PorTugal CH SwiTzerland IE Ireland RO Romania CY Cyprus IS Iceland SE Sweden CZ Czech Republic IT ITaly SI Slovenia DK Denmark JP Japan SK Slovak Republic EE EsTonia LT LiThuania UK UniTed Kingdom ES Spain LU Luxembourg US UniTed STaTes DE Germany LV LaTvia 4 IWP15 - Income Inequality among Children.qxp_Layout 1 12/04/17 10:45 Pagina 5 TABLE OF CONTENTS 1. InTroducTion ......................................................................................................................... 6 2. Income inequaliTy among children in Europe ................................................................. 10 2.1 MeThodology ..............................................................................................................10 2.2 Income inequaliTy among children in Europe: resulTs ............................................11 2.3 Income inequaliTy among children in Europe: income wiThouT social Transfers .............................................................................. 20 3. The relaTionship of income inequaliTy among children wiTh oTher income measures .................................................................................................... 24 4. Conclusion ......................................................................................................................... 32 References ............................................................................................................................... 34 Annex ..................................................................................................................................... 37 5 IWP15 - Income Inequality among Children.qxp_Layout 1 12/04/17 10:45 Pagina 6 Income Inequality among Children in Europe 2008–2013 Innocenti Working Paper 2016-15 1. INTRODUCTION Income inequaliTy has emerged as one of The mosT pressing concerns in The global communiTy of scholars, policy makers and developmenT professionals alike. A number of high-profile reporTs and publicaTions (OECD 2009; OECD 2014; OsTry, Berg & Tsangarides 2014; Dabla-Norris eT al 2015; STigliTz 2015; ATkinson 2015) presenT evidence on rapidly growing exTreme income inequaliTy and challenge governmenTs To reassess Their approaches To redisTribuTion. Issues around social divisions are parTicularly Troublesome when aTTenTion is drawn To children and young people. This paper will measure and compare The evoluTion of income inequaliTy wiTh a focus on children across 31 counTries; iT Therefore conTribuTes To The wide-ranging debaTe on inequaliTy and child maTerial well-being wiThin The policy agenda of increasing social mobiliTy and fuTure producTive growTh of indusTrialized naTions. Global inequaliTy remains high and ranges from 0.55 To 0.70 depending on Gini measure used 1 (Dabla-Norris eT al 2015). This is mosTly due To The differences beTween higher- and lower-income counTries (Milanovic 2013). Income inequaliTy has also been growing rapidly in many counTries over The lasT 20 years despiTe The immense wealTh creaTed Through impressive economic growTh (UNDP 2013).