The probability of poverty for mothers after childbirth and divorce in Europe: The role of social stratification and tax-benefit policies
Introduction
The probability of poverty has been traditionally associated with the position of an individual in the social stratification system, e.g. parameters such as gender, ethnicity, education, and social class (Duncan, 1968; Townsend, 1979; Erikson and Goldthorpe, 1993; Grusky, 1994; Breen, 2005; Grusky and Weeden, 2008). At the same time poverty might be triggered by life course events, such as leaving a parental home, childbirth, job loss, and divorce (Rowntree, 1902; Rig and Sefton, 2006). Some authors argued that the power of social stratification determinants has decreased in the context of general life course uncertainty (Beck, 1992; Kemshall, 2002; Taylor-Gooby, 2004). Evidence suggests, however, that these two types of parameters are interlinked. First, life course risks appear to be unequally distributed across social groups (Härkönen and Dronkers, 2006; McLanahan and Percheski, 2008; Klesment et al., 2014). Second, although biographical events such as childbirth and divorce are widespread, their negative consequences are distributed unequally (Walker, 1994; Layte and Whelan, 2002; Dannefer, 2003; Whelan and Maitre, 2008; Vandecasteele, 2011).
The welfare state may play an important role in reducing the negative consequences when biographical risks materialize by means of horizontal redistribution, as well as in reducing social inequalities through vertical redistribution. Comparative welfare state research originating in the works of Esping-Andersen (1990) highlights substantial differences in the institutional design of the tax-benefit systems across the EU. This results in different distributional outcomes for the population in general and for women with children in particular, i.e. female and child poverty rates (Lister, 1994; Taylor-Gooby, 1996; Esping-Andersen, 1999; Bambra, 2004).
The aim of this study is to disentangle the effects of tax-benefit systems, social stratification determinants, and life course events on the probability of poverty among women with children in European countries. Reducing poverty among mothers is important not only for their own well-being, but also for improving the life chances of their children. It is also important for increasing the economic autonomy of women, e.g. their freedom not to continue a potentially repressive relationship because of economic dependency (Orloff, 1993).
The contributions of this study are two-fold. First, we analyze how different types of EU welfare regimes contribute to mothers' capacity to avoid poverty after childbirth and divorce/separation.1 These are two widespread life course events that bring about substantial income shocks due to a loss of one's own or the partner's income. In other words, we are looking at how various tax-benefit systems support incomes of mothers with new-born children and single mothers. The analysis has been carried out in twelve countries representing different European welfare state regimes. We simulate the two life-course events and the related income shocks using the tax-benefit microsimulation model EUROMOD and the EU-SILC data. The reference period for the analysis is 2015.
The second contribution of the paper is to confirm whether there is a social gradient to poverty among mothers after childbirth and divorce/separation and whether it varies across different welfare systems. To assess the impact of mothers’ social class on the probability of poverty after childbirth and divorce, we carry out a regression analysis of the simulated results.
From a methodological point of view, by focusing on demographic events, this paper offers an extension to the stress-testing methodology by Atkinson (2009). The approach is aimed at measuring the performance of the welfare state in providing an effective safety net to individuals after various income shocks. It was previously applied to study the effects of a rise in unemployment (Figari, et al., 2011; Fernandez Salgado et al., 2013; Navicke, 2015). The microsimulation approach to assessment of financial consequences of childbirth and divorce is superior to other previously employed methods for this type of analysis. First, it enables us to assess the functioning of the tax-benefit system taking into account all its elements rather than separate tax-benefit components targeted at particular risks. Second, it helps obtain estimates that are representative for the whole population and study the distribution of welfare provisions and outcomes at the micro-level. Finally, simulations of the income shocks across the whole potentially vulnerable population helps avoid the problem of small samples and self-selection in survey data, where we observe mothers who have already experienced childbirth or divorce and have adjusted their behaviour to the new circumstances. Given the nature of our simulations, the results presented in this paper should be interpreted as first-order effects of the public policies before any behavioural adjustment occurs.
In the next section, we review literature on social stratification and life-course risks as poverty determinants and the role different welfare regimes play in moderating these factors. We then discuss methodological choices made for assessing the probability of poverty in the case of two life course events and its stratification gradient. Finally, we present our findings and the main conclusions of the study.
Section snippets
Social stratification, life-course risks and the welfare state policies as poverty determinants
Poverty is an experience bearing immediate and long-term negative consequences for individual life chances and society as a whole. The probability of experiencing poverty may vary considerably depending on micro-level factors (characteristics of individuals and their households) and on macro-level factors (economic situation, the welfare regime). The existing literature distinguishes between two broad groups of poverty determinants at the micro-level: social stratification factors and life
Methodology: assessing the effects of tax-benefit policies and social stratification on probability of poverty
To assess the role of the welfare state in reducing the probability of poverty after childbirth and divorce we use the stress-testing approach originally developed in the field of finance (e.g. Jones et al. (2004)) and proposed by Atkinson (2009) for measuring the performance of the welfare state in mitigating the effects of various income shocks on individuals. The approach relies on tax-benefit microsimulation modelling which allows us to compare the distributional effects of the tax-benefit
Income replacement, compensation and poverty
We start the discussion of the results with the indicators of income stabilization (replacement and compensation rates) and poverty for mothers after childbirth and divorce across the twelve EU countries.
Fig. 1 shows variation in replacement rates between and within countries in case of childbirth and divorce at the median as well as their 10th, 25th, 75th and 90th percentiles. As a reminder, the replacement rate is the ratio of payments directly targeted to mitigate costs associated with
Discussion
This paper attempted to disentangle the effects of tax-benefit systems, social stratification determinants and life course events on the probability of poverty among women with children. The study offers several contributions to the existing literature. First, it explicitly compares the level of social protection available to mothers after two types of widespread life-course events: childbirth and divorce/separation. Second, it covers a whole variety of contemporary European welfare regimes
Acknowledgements
This work was supported by a New Opportunities for Research Funding Agency Cooperation in Europe (NORFACE), project “Inequalities, Insurance, Incentives and Immigration: Challenges and Solutions for the Welfare State” (4Is). We are indebted to the many people who have contributed to the development of EUROMOD and for comments of the core and national development teams on our simulation procedures. Support from the Basic Research Program of the National Research University Higher School of
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