Study on poverty transitions shows that poverty lasts longer for vulnerable groups

Lone parents and working-age adults with a disability were more likely to experience persistent deprivation during the years 2004-2015, according to new research published today (7 December).

The research examined the movement of social risk groups into and out of poverty before, during and after the recession.

Social risk groups are groups that differ in their ability to meet their needs through the market (mainly through work) because of different types of barriers: lone parents, people with a disability, young adults, children, older adults and the reference group of other working age adults, who face fewer barriers.

Measuring poverty and deprivation

The research drew on the Irish Survey on Income and Living Conditions (SILC) longitudinal data from 2004-2015 and used the two national indicators of poverty:

• Income poverty involves being below 60 per cent of the median take-home household income, after adjusting for household size and composition. The average level of income poverty in the period was 16 per cent.
• Basic deprivation involves being unable to afford two or more of eleven basic goods and services such as adequate food, clothing, heating for the home, replacing worn-out furniture and being able to have an afternoon or evening out. The average level of basic deprivation in the period was 21 per cent.

The research examined poverty and deprivation during two-year periods, for example 2004-2005 and then 2005-2006 and so on, in order to capture information that would not be captured at a single point in time.

Moving in and out of poverty

• On average over the period, and looking at how people fared across pairs of years, 14 per cent were deprived in both years, 7 per cent in the first year only and 7 per cent in the second year only.
• This means that 28 per cent were deprived in at least one of the pair of years.  Of those deprived in the first year (21 per cent of people), about two thirds were still deprived in the second year.
• Turning to income poverty, 23 per cent were poor in at least one year and of those poor in the first year (17 per cent of people), about 60 per cent were still poor in the second year.

Which groups have the highest risk of persistent deprivation?

• All social risk groups experienced an increase in persistent deprivation over the period 2004-2015 but the risks were always higher for lone parents and working-age adults with a disability. The risk was lowest for older people.
• Persistent deprivation for lone parents rose from 30 per cent during the boom to almost 45 per cent following the recession.
• Persistent deprivation for working-age adults with a disability rose from 15 per cent to 37 per cent during the same period.
• To put these figures in context, persistent deprivation for other adults aged 30-65 was 4 per cent in the boom and 8 per cent following the recession.

The effect of the recession

• Earlier ESRI research showed that deprivation did a better job than income poverty in capturing the falling living standards associated with the recession. This is because it directly measures what people can afford to have or to do.  Income poverty, on the other hand, was affected by the poverty threshold which fell in line with incomes in general during the recession.
• The level of deprivation and persistent deprivation fell during the boom years (2004-2007) and rose during the recession (2008-2010).
• Deprivation rose to 31 per cent in 2012-13 (compared to an average across the period of 21 per cent), before beginning to fall.  The highest rate of income poverty in the recession was 17 per cent, just one percentage point higher than the average across the period of 16 per cent.
• While persistent deprivation increased with the onset of recession, the pattern for persistent poverty is less clear.

Policy implications

The paper highlights the importance of longitudinal data to better understand poverty dynamics which is particularly relevant in a period of profound economic turbulence.  Report author Dorothy Watson notes “The study shows that when we consider poverty over two years, the proportion of people experiencing poverty in at least one of them is much higher than when measured at a given point in time. Members of vulnerable groups such as lone parents and those affected by a disability experienced a high rate of persistent deprivation even into the recent recovery period suggesting a need for special supports to enable them to take advantage of the benefits of economic recovery.”