De la Fuerza Armada

The estimates of the poverty gap for each family type have been calculated by summing the difference between each individual family's income and its poverty line.37 The total gap is then averaged across the families defined as poor in each group and expressed as a percentage of the poverty line. The full results of these estimates are reported in Appendix B.

Like the aggregate estimates of the poverty gap, the disaggregated estimates of the poverty gap are virtually identical, whether the OECD or Whiteford scale adjusted incomes are used. Unlike the aggregate measures however, there is considerable variation in the average post-transfer poverty gap across the Z* range for each family type. There are two main causes of this variation. First, the very small cell counts for some family types (especially the aged) at the 40% and 50% intervals exaggerate the average size of the poverty gap. In particular, it is families which report negative or zero disposable incomes which affect the results at these lower levels.38 Second, countries which successfully reduce the poverty gap and/or have a relatively

37 The methodology for calculating the poverty line for each family is discussed in Chapter 2. 38 Families which report negative incomes are recoded to zero as discussed in Chapter 2.

small number of families in their surveys, have lower cell counts across the Z* range which again contributes to the unreliability of the poverty gap estimates.

For these reasons, the disaggregated poverty gap measures are reported for the 60% poverty interval, using the OECD equivalence scale. At this level of the Z* range, the greatest number of observations are captured for each family type in each country. Generally, the number of observations at this interval is sufficient to offset any unreliability arising from sampling error and the under-reporting of income.

4.7.1. Disaggregation of the post-transfer poverty gap.

Tables 4.29 to 4.31 report the average poverty gap estimates for each family type pre- and post- transfer and the reduction in the poverty gap for each family type. Pre-transfer, the poverty gap estimates show that the average size of the poverty gap is fairly similar across the family types, with the exception of couple-headed families with children whose pre-transfer gaps are generally less than those of other families. The one exception to this is the Netherlands, where the pre-transfer gap for this family type is similar to other types of families. Thus although the composition of the pre-transfer poor population is dominated by aged families, the poverty gap estimates show that other families who are poor have poverty gaps of a similar magnitude to the aged.

Post-transfer, the poverty gap measures tell a similar story to the head-count. As noted earlier, the results are generally unaffected by the equivalence scale used, the main exception being single aged persons who are reported in larger numbers by the Whiteford scale. Table 4.28 shows the rank correlation coefficients for each family type.

Table 4.28. Rank correlation coefficients post-transfer gap at the 60% interval, OECD scale. Single Couple Lone Couple

Aged (S) Aged (Q (N O (N O Parent (CHI Other

OECD-WTord 0.80 0.95 0.85 0.94 0.96 0.98 0.98

Generally, the poverty gaps for aged families are considerably reduced after social security transfers. In the case of the Netherlands it should be noted that the estimate is based on an extremely small cell count (28 cases), the majority of which report a zero disposable income.

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Table 4.29. Average pre-transfer poverty gap at the 60% interval, OECD scale. Poverty gaps for families as a percentage of the poverty line.

Aged (S) Aged (C) Single (NC) Couple (NC) Lone Parent Couple (CH) O th er A u stralia 87 81 76 71 82 51 66 C anada 79 65 68 50 74 40 59 France 91 82 75 60 57 36 61 Germany 93 87 85 71 60 33 72 N etherlands 80 78 96 87 92 80 84 N orw ay 84 72 79 70 69 39 * Sweden 82 76 65 56 56 35 * Sw itzerland 69 56 63 61 60 20 * UK 84 73 78 61 74 34 70 USA 80 65 65 53 70 39 65

Table 4.30:_A:yerage^post-toamfer poverty gap at the 60% interval, OECD scale. Poverty gaps for families as a percentage of the poverty line.

Aged (S) Aged (C) Single (NC) Couple (NC) Lone Parent Couple (CH) O th er A u stralia 8 13 41 29 33 30 30 C anada 16 18 44 34 41 28 29 France 10 19 47 36 38 25 35 Germany 25 21 35 38 24 16 34 N etherlands 66 26 89 53 17 39 34 N orw ay 48 16 48 40 24 24 * Sweden 5 10 43 31 30 24 * S w itzerland 22 18 50 31 39 16 * UK 14 15 25 22 21 20 14 USA 31 30 48 37 43 29 42

Table 4.31. Reduction in the poverty gap at the 60% in terv al OECD scale. Percentage reduction in the poverty gap

Aged (S) Aged (C) Single (NC) Couple (NC) Lone Parent Couple (CH) O th er A u stralia 91 84 46 59 60 41 55 C anada 80 72 35 32 45 30 51 France 89 77 37 40 33 31 43 Germany 73 76 59 46 60 52 53 N etherlands 18 67 7 39 82 51 60 N orw ay 43 78 39 43 65 38 * Sweden 94 87 34 45 46 31 * S w itzerland 68 68 21 49 35 20 * UK 83 79 68 64 72 41 80 USA 61 54 26 30 39 26 35

The largest poverty gaps are reported for single people without children. Apart from the UK, the average post-transfer poverty gap for this group is greater than 35% of the poverty line for all countries. Detailed investigation of this group in the course of this study indicates that the prevalence of poverty among this group may be mitigated by intra-family transfers (upwards of 30% of this group reside with their parents in all countries). In several countries - Australia, US and Canada - there is a significant number

of unemployed persons in this group. The heterogeneity of this group makes it difficult to ascribe any strong explanatory causes for the post­ transfer position of single persons, other than the arguments advanced in the OECD study discussed at the outset of this chapter, namely that young adults are not viewed with the same legitimacy as other groups in terms of their claims on the transfer system.

This latter point is also applicable to lone parents who are another group with a large post-transfer poverty gap, reflecting a dependence on income transfers as the major source of income.

Couples without children also record large poverty gaps. In head-count terms, this group is relatively small in all countries - excepting Australia, Canada, France and the US39 - and the averages are affected by the incidence of zero incomes for this group.

The post-transfer position of families with children, as evidenced in the LIS data, has been extensively discussed by Smeeding et al (1989:110-115). The estimates of the poverty gap for these families concur with Smeeding's findings.

4.7.2. Disaggregation of the post-transfer reduction in the poverty gap.

The reduction in the poverty gap for each family type is again similar to the picture presented by the head-count measure. Generally, it is aged families whose poverty gaps are most reduced by the transfer system and single persons the least. Surprisingly, lone parents poverty gaps are considerably reduced even though they are more likely to be poor post-transfer than any other group. Part of the explanation for this is simply that this group starts from a low pre-transfer position. But it also indicates that income support programs for lone parents, however modest, are in place in all of the LIS countries.

Unlike lone parents, the couple-headed families with children have far less reduction in their poverty gaps. In particular, families with unemployed household heads and the "working poor" with three or more children are a significant among this group. This issue was again raised in the OECD report discussed in Section 4.1, which noted that the necessity for program coverage

39 In these countries this group is present in the poor population in roughly the same numbers as the overall population.

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for this group of the "new poor" was only beginning to be recognised in the 1980s. Thus in countries such as Australia and the UK, Family Income Supplement programs were introduced in the course of the decade in response to evidence similar to the estimates presented here for 1980. For the remaining family types, the reductions measures are generally not worth comment mainly due to cell count problems.

4.7.3. Comparing disaggregated poverty levels: head-counts versus poverty gaps.

At the disaggregated level, the poverty head-count appears to be a more informative measure than the poverty gap. This is largely due to the effect of of small cell counts post-transfer, so that just one or two families with zero incomes are sufficient to distort the average poverty gap when measured against the poverty line income. For further discussion of this point see Appendix G.

The head-count can be disaggregated in two ways to show: the composition of the poor; and indicate the representation of each family type in the poor population. The reduction in the head-count for each family type also provides critical information about the effectiveness of the transfer system. Each of these measures gives a slightly different perspective on the numbers, and significance, of different family types in poverty and the impact of transfers on this poverty.

Although the poverty gap is less useful in this context, it does add some important information to the head-count picture. For example, although the pre- and post- transfer poverty populations in most of the LIS countries are dominated by one or two groups in terms of numbers, there is considerable variation between, and within, these countries in terms of the direction of transfers to different family types to close these gaps.

While the head-count appears to be an unreliable measure at the aggregate level, it is a necessary starting point for disaggregated analyses. The poverty gap measure adds information to the head-count picture, but cannot stand alone as a summary measure in this context.