Why Are Child Poverty Rates Higher in Britain than in Germany? A Longitudinal Perspective

Abstract

We analyse why child poverty rates were much higher in Britain than in Western Germany during the 1990s, using a framework that focuses on poverty transition rates. Child poverty exit rates were significantly lower, and poverty entry rates significantly higher, in Britain. We decompose these cross-national differences into differences in the prevalence of 'trigger events' (changes from one year to the next in household composition, household labour market attachment, and labour earnings), and differences in the chances of making a poverty transition conditional on experiencing a trigger event. It is the latter which are most important in accounting for the cross-national differences in poverty exit and entry rates.1

A Portrait of Child Poverty in Germany

“…Thus, entry into poverty (and exit from poverty) is often preceded by demographic or labor market events. Following Jenkins and Schluter (2003), we define several (not entirely mutually exclusive) events and estimate the probability that such an event takes place as well as the probability that a child leaves poverty (enters poverty) conditional on the event taking place. Table 4 presents these probabilities separately for children living in single and two‐adult households.…”

The psychology and behavioural economics of poverty

“…Pre-transfer poverty rates are high and with low levels of resource devoted to welfare and unemployment policies, the real issue, according to Plotnick, is not whether welfare policies may or may not have some undesirable consequences but rather whether there will emerge the political will to make significant redistributions. Evidence for such views can be found elsewhere including an interesting econometric analysis of poverty entry and exits by Jenkins and Schluter (2001) in which they compare child poverty rates in Britain and Germany by decomposing the cross-national differences into the prevalence of trigger events, and differences in the chances of making a poverty transition conditional on experiencing such trigger events. These latter events are more important in explaining differences between the two countries, a result from which they conclude that the German welfare state provides a better cushion against adverse events and more adequately reinforces positive events.…”

The Impact of Lifecycle Events on Women's Labour Force Transitions: A Panel Analysis*

“…We can use them to construct a (descriptive) decomposition of the fraction of all transitions accounted for by each of the different lifecycle events. This methodology is adopted from Jenkins and Schluter (2003). 4 We extend their analysis by estimating random effects panel probit models of LFTs with a set of control variables including trigger events, age, regional dummies, educational dummies and a correction term for sample selection bias.…”

“…4 4 Jenkins and Schluter (2003) examine whether cross‐national differences in child poverty and entry and exit rates arise from cross‐national differences in the prevalence of trigger events experienced by households and household members, or by cross‐national differences in entry and exit probabilities conditional on experiencing those trigger events. …”