Recent changes in family outcomes and policies in OECD countries: the impact of the economic crisis

Abstract

Following decades of progress in prosperity, female employment participation and early childhood education and care policies, the recent economic crisis which began in 2007/2008 has had a negative impact on many aspects of family and child well-being in many OECD countries. Although effects vary across countries, the growth in female employment stalled, as did the rebound in fertility rates, divorce rates went up, while child income poverty increased further. The economic crisis also affected family policy. In many countries, income support policies initially expanded but after the onset of the crisis cutbacks to government spending were often made in view of budgetary pressures. In many countries, financial supports for families are less generous now than they were prior to the crisis. By comparison, parental leave arrangements and childcare supports systems have remained largely unscathed in most OECD countries with some countries actually expanding childcare supports despite the limitations to fiscal space. This paper highlights the changes in important family outcomes and related policies that occurred in OECD countries following the onset of the economic crisis, and demonstrates how countries most affected by the crisis faced significantly worse outcomes for families and children.

Après des décennies de progrès en terme de prospérité, de participation des femmes dans le marché du travail et de politiques d’éducation et de garde des jeunes enfants, la récente crise économique qui a commencé en 2007/2008 a eu un impact négatif sur de nombreux aspects de la famille et du bien-être de l’enfant dans de nombreux pays de l’OCDE. Bien que les effets varient selon les pays, la croissance de l’emploi féminin a décroché, tout comme le rebond des taux de fécondité ; les taux de divorce ont augmenté et le taux de pauvreté des enfants n’a cessé d’augmenter. La crise économique a également affecté la politique familiale. Dans de nombreux pays, les politiques en faveur des aides sociales étaient plus élargies mais après la crise, les dépenses publiques ont connu des compressions budgétaires. Dans de nombreux pays, les soutiens financiers aux familles sont moins généreux aujourd’hui qu’ils ne l’étaient avant la crise. Par comparaison, le congé parental et les systèmes de soutien de garde d’enfants ont largement été épargnés dans la plupart des pays de l’OCDE, avec même dans certains pays, des soutiens aux systèmes de garde d’enfants plus élargis en dépit des limitations budgétaires. Ce document met en évidence d’importantes évolutions apparues dès le début de la crise économique dans les résultats liés aux familles et aux politiques familiales et démontre la façon dont les pays les plus affectés par la crise ont enregistré des résultats bien plus mauvais concernant les familles et les enfants.

Keywords:

• family policies
• family outcomes
• family spending
• economic crisis

Mots-clés:

• politiques familiales
• résultats lies aux familles
• dépenses des familles
• crise économique

Acknowledgement

The authors work in the OECD Social Policy Division (http://www.oecd.org/els/soc/). They are grateful to Fred Deven, Michael Förster, Peter Moss, Monika Queisser and Dominic Richardson for comments on a previous version. The views expressed in this paper as well as any remaining errors are the responsibility of the authors; they cannot be attributed to the OECD or its Member governments.

Notes on contributors

Willem Adema currently leads a team of analysts of Family and Children policies in OECD countries and he is also responsible for the online OECD Family database (www.oecd.org/els/social/family/ and www.oecd.org/els/social/childwellbeing). His other responsibilities include the OECD Social Expenditure database (www.oecd.org/els/social/expenditure) and a labour market and social policy review of Russia. He has written extensively on a wide range of labour market, fiscal and welfare policy issues and was editor of the first issue of Society at a Glance: OECD Social Indicators. Willem was project manager and editor of the OECD Babies and Bosses Reviews on the reconciliation of Work and Family Life in OECD countries for which he prepared a synthesis issue in November 2007. From late 2005 until early 2008, he was Head, Asian Social and Health Outreach working closely with the Joint OECD/Korea Regional Centre for Health and Social policy in Seoul. In 2008 and 2009, he was responsible for the OECD Labour Market and Social Policy Reviews of Chile (www.oecd.org/els/chile2009) and Israel (www.oecd.org/els/israel2010). Willem graduated from the Erasmus Universiteit in Rotterdam and holds a doctorate from St Edmund Hall, University of Oxford.

Nabil Ali joined the OECD Social Policy Division as statistician in 2010 and works on a range of issues related to Family and Child well-being (www.oecd.org/els/family). His responsibilities include overall management of the OECD Family database (www.oecd.org/els/social/family/) and he was also involved in the development of the OECD Gender Data Portal (www.oecd.org/gender/data). Nabil has written on range of issues related to family and child policies and is a co-author of the recent OECD publications Closing the Gender Gap (www.oecd.org/gender/closingthegap.htm) and Doing Better for Families (www.oecd.org/social/family/doingbetter). Previously, he worked at the Department of Education in the UK Civil Service on public policies related to primary and secondary school performance. Nabil holds Master's degrees from the University of Cambridge and the University of Glasgow and a doctorate from Imperial College London.

Notes

1. The Organisation for Economic Cooperation and Development (OECD) is a unique forum where the governments of 34 democracies with market economies work with each other to promote economic growth, prosperity, and sustainable development. Involving most of the leading economies in the world, the OECD provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and coordinate domestic and international policies.

2. 2005 was chosen as the year for ‘anchoring’ median incomes across countries as it preceded the economic upheaval that unfolded in OECD economies in 2007/2008. The median income for 2005 is inflation adjusted such that the poverty threshold is kept constant in real terms over time.

3. The numbers presented in Figure 3 are calculated from the EU-SILC survey where data are available on an annual basis. This varies to some extent from the source for poverty rates presented in Figure 1 Panel D, Figure 2 and Annex Table 1, which are based on the OECD Income Distribution database (OECD, 2014b) often on the basis of national surveys.

4. Due to the nature of available data a more thorough analysis of natural policy experiments was not possible; data trends did not meet required statistical assumptions (e.g. for a difference-in-differences approach) or the number of observations was insufficient (e.g. for propensity scores, regressions and instrumental variables approaches).

5. The discussion here is around public social spending as measured before the impact of the tax system. Tax systems affect social spending totals through direct and indirect taxation of benefit income and associated consumption as well as the provision of tax breaks with a social purpose (see Adema, Fron, & Ladaique, 2014b). However, relevant fiscal data is not available for many countries prior to 2000 and therefore does not facilitate trend analysis.

6. Social spending includes: (1) social transfers and cash spending related to social security benefits paid by general government; (2) service spending related to social transfers in kind; (3) public expenditure on active labour market programmes; (4) public pension spending; (5) income support to the working-age population; (6) public health spending; and (7) other public spending on other social services. Public spending on education is not included as part of social spending in this analysis.

7. Families with lower earnings often receive more support. For example, in 2011 on average across the OECD additional family support for a sole parent with 2 children and earnings of 66% of AW amounted to 21% of net disposable income, compared with additional support of 13% of net disposable income for a comparable sole-parent family on 100% of AW.

8. In Chile, family benefits are income-tested on the wages of the lowest earner, thus parents in couple families with children with earnings at 133% and 67% of the AW are eligible for benefits while sole-parents on 100% of AW are not.

9. The EITC in the USA is a refundable tax credit for low to moderate income working individuals and couples. The amount of EITC benefit depends on a recipient's income and number of children. Thus, although payments are higher for individuals with children, the benefit is not exclusively for families.

10. Overall, enrolment rates for children aged 3–5 is substantially higher than formal childcare enrolment for 0 to 2s as many parents use child-related leave to take care of children in this age group.