The theoretical framework is illustrated graphically in Figure 3.1, and the following provides a commentary on it.
We hypothesise that labour market institutions and social security systems (collectively referred to as ‘welfare regimes’ in Box A) determine ‘primary’ levels and distribution of incomes. Distinctive welfare regimes have operated in Europe throughout the post-1945 period, but governments have responded to common pressures and reforms have been introduced in many of them aimed at increasing employment. Welfare regimes still produce different patterns of employment, poverty and inequality (Boxes B and C) and the evidence suggests that such relationships are complex, though it does support the idea that the relationship between in-work incomes and out-of-work incomes exert labour market (dis)incentives.
Levels and patterns of income distribution arising from the operation of welfare regimes will be a strong determinant of housing outcomes (Box D). Indeed in a housing system that was based purely on market rental housing we would expect differences in housing outcomes to mirror income differentials very closely.
Yet there are sound theoretical reasons to suggest that income poverty and inequality need not necessarily result in housing poverty. Housing policy and other features of the housing system (Box E) may serve to disrupt the link between current income and housing outcomes. The key public policy interventions that we identify as facilitating access to levels of housing consumption that could not be obtained in a system that allocated resources purely by market mechanisms are as follows:
social rented and other below market rental housing;
housing allowances; and
outright home-ownership.
Figure 3.1 Theoretical framework
(A) WELFARE REGIME
(tax, social security, labour market)
(E) HOUSING SYSTEM
a) Housing market
b) Key housing policy interventions and system features:
1. social rented and other below market rental housing
2. housing allowances 3. outright home-ownership
(B) SCALE &
DISTRIBUTION OF POVERTY &
INEQUALITY
(C) LABOUR MARKET
OUTCOMES
(D) HOUSING OUTCOMES
(F) HOUSING DEPRIVATION
1. Cost of housing 2. Quantity of housing 3. Physical quality of housing 4. Quality of neighbourhood
(G) HOUSING EXCLUSION / HOMELESSNESS
1. Level of homelessness 2. Nature/causes of
homelessness
(H) INDIVIDUAL CAUSES/FACTORS
(I) TARGETED INTERVENTIONS ON HOMELESSNESS
Causal relationship Necessary relationship
Both the Welfare Regime (Box A) and the Housing System (Box E) have a strong influence on Housing Deprivation (Box F), which we identify as related to:
the cost of housing consumption;
the quantity of housing consumed;
the physical quality of housing consumption; and
the quality of the neighbourhood in which housing is consumed.
We have established that the measurement of these ‘housing outcomes’ needs to be conceptualised clearly, so that we can distinguish between absolute housing standards that we might aspire for all households to attain in the European Union, regardless of country; and relative housing standards that relate to the norms that apply in individual countries, and which we would expect to rise with economic growth. We would therefore expect country-level housing outcomes to be higher in countries with higher per capita incomes. It is important that these concepts are properly benchmarked. Moreover, we have also established that it is also important that the findings are interpreted by being embedded in an understanding of the institutional framework of housing policy.
So we can summarise the key principles for interpreting the link between housing outcomes and welfare regimes as:
conceptualised: We must be clear whether (or when) the concept of ‘housing poverty’ is absolute or relative;
benchmarked: We must ensure that comparisons between countries are conducted in a meaningful way so that we can identify performance; and
embedded: We require the attribution of housing outcomes to public policies or other features of the housing system to be embedded in an understanding of distinctive national institutional structures.
On the basis of existing evidence we also hypothesised that the Welfare Regime and Housing System will causally impact on both the level and nature of homelessness (Box G), which we identify separately from the other housing outcomes. Thus, we suggested that strong welfare regimes that deliver relatively low levels of poverty, especially when combined with strong housing policies, will lead to lower levels of homelessness than in countries where welfare regimes deliver high levels of poverty, especially where housing policies are also limited. With respect to the nature of homelessness, we postulate that structural causes will be more important in weak welfare regimes, and individual causes (Box H) will be proportionately more important in strong welfare regimes. We also expect that targeted homelessness interventions (Box I) can have positive effects even in malign structural contexts. (Some additional hypotheses on homelessness are offered in Chapter 9 after a more detailed examination of the existing literature on this topic.)
Finally, we suggest that the housing system can feed-back into having impacts on employment through three routes:
impacts of the housing system on inter-regional labour mobility (Box E);
the financial work incentives implied by the housing system (Box E);
any independent impacts on employment that arise from poverty neighbourhoods (Box F).
There is evidence that financial incentives established by welfare regimes have some impact on employment levels, but relatively little is known about the impacts of housing systems on employment levels. Existing knowledge focuses on owner-occupation where employment levels are generally high, but neglects the financial incentives implied by sub-market rents, outright home-ownership and housing allowances. There is also limited evidence that poverty neighbourhoods create independent area effects on employment levels. Both will also benefit from qualitative research that can identify behavioural patterns that may be lost in statistical analysis and institutional nuances – such as housing allowance administration – that may be significant yet remain unobserved in statistical analysis.
Five essential research questions arise from the aims of the project and the theoretical framework:
What is the impact of poverty on housing outcomes?
What is the impact of housing policy interventions on housing outcomes (for poor households)?
What is the impact of employment status on housing outcomes (for poor households)?
What is the impact of housing on employment outcomes?
What is the impact of the welfare regime and housing system on the nature and causes of homelessness, and how effective are targeted responses?