MAP 2.1: MAP 2.1: Map of housing in the world
3.2. The barriers between households and the market
3.2.1. The source of household income
but they reveal nothing about the flow of non-monetary resources which constitute their central axis.
amount is € 1,742 (this was € 2,692 in 2008). Receiving income from family benefit is rather more frequent (4.1%, with an average sum of € 2,639 per year), and housing support (1.5%), with an aver- age value of € 2,058 per year44 (this was € 2,155 in 2008).
With respect to transfers between households, generally united by family relationships, the Living Conditions Survey 2009 enables us to estimate that 3.2% of households receive from, and 6.5% of households pay transfers to other households (in 2008, these were 2.6% and 6.1%, respectively). The explanation for this disparity must lie in international transfers, because the receiving house- holds do not fall within the scope covered by this survey. It is also possible that receiving households may receive help from various different households, and/or that transfers paid are remembered better than transfers received. The average income sent per house- hold was € 3,262, and that received € 3,792. The disparity in the sums may be due to the same cause, that those who receive transfers in Spain receive greater amounts than those who received them from Spain.
Table 3.6 shows the distribution of households by their principal source of income. The table is interesting due to the information on the composition of households: there are numerous households of pensioners and the retired, almost one third of the total number of households, with less than one quarter of the number of people living in them. Households of employees are the majority (49% of the total number of households), and contain an even higher pro- portion of people (54%). In two years, the percentage of house- holds living on benefits has more than doubled.
Immigrant workers in general occupy the lowest strata of the la- bour market, and their income is less than that of Spanish workers (Table 3.7). The differences are greater in hourly wages than in monthly wages, because it is less frequent for them to work part time.
The average income of women is almost 30% lower than that of men, of whatever origin, because it is proportional to the wage and to the years over which contributions have been made (Table 3.8).
44 More information on this question is included the section 3.4 (p. 180) on the re- lationship between households and the State.
TAble 3.6: Distribution of households, by principal source of household income, 2007 and 2009 2007 2009 Households Percentage People Percentage Average Households Percentage People Percentage Average size of size of household household Total16,103,177100.044,120,939100.02.7416,858,669100.045,146,733100.02.68 Not stated114,4100.7371,5490.83.25118,8140.7368,8890.83.10 Self-employment2,127,52013.26,850,37415.53.222,079,79912.36,479,20914.43.12 Employment8,372,92952.025,350,16557.53.038,310,99949.324,521,08454.32.95 Contributory and non- contributory pensions 4,916,09030.510,128,31923.02.065,202,11230.910,649,80923.62.05 Unemployment allowances and benefits and other allowances 350,5232.2983,9442.22.81903,5605.42,614,2155.82.89 Property and capital income and other regular income 221,7041.4436,5871.01.97243,3851.4513,5261.12.11 Source: Prepared by M.A. Durán using data from the Family Budget Survey 2007 and 2009 (INE 2007, 2010).
TAble 3.7: Adults with ordinary income by type of income, average net annual income, and gender*
A b C D e F G
Type of income Total Percentage Men % of income Women % of income % women’s persons of income (’000 over (’000 over income
(in over persons) employment persons) employment over men’s
thousands) employment income income income
income employment
Persons (thousands) 19,098.1 10,453.3 8,644.8
Percentage of persons 49.7 55.5 44.2
Average income in 2007 (€) 15,414.0 100.00 17,293.0 100.00 13,143.0 100.00 76.00 Self-employment
Persons (thousands) 2,905.2 1,984.8 920.4
Percentage of persons 7.6 10.5 4.7
Average income in 2007 (€) 9,492.0 61.58 10,248.0 59.26 7,859.0 59.80 76.69 Unemployment benefits
Persons (thousands) 3,165.0 1,692.7 1,472.4
Percentage of persons 8.2 9.0 7.5
Average income in 2007 (€) 3,932.0 25.51 4,189.0 24.22 3,636.0 27.66 86.80 Old age benefits
Persons (thousands) 7,039.7 3,791.5 3,248.2
Percentage of persons 18.3 20.1 16.6
Average income in 2007 (€) 11,341.0 73.58 13,376.0 77.35 8,965.0 68.21 67.02 Widowhood benefits
Persons (thousands) 564.6 100.7 464.0
Percentage of persons 1.5 0.5 2.4
Average income in 2007 (€) 7,032.0 45.62 5,369.0 31.05 7,393.0 56.25 137.70 Sickness benefits
Persons (thousands) 536.9 291.6 245.3
Percentage of persons 1.4 1.5 1.3
Average income in 2007 (€) 4,618.0 29.96 4,750.0 27.47 4,462.0 33.95 93.94 Invalidity benefit
Persons (thousands) 835.2 549.5 285.8
Percentage of persons 2.2 2.9 1.5
Average income in 2007 (€) 9,341.0 60.60 10,430.0 60.31 7,245.0 55.12 69.46 education support
Persons (thousands) 699.5 285.3 414.2
Percentage of persons 1.8 1.5 2.1
Average income in 2007 (€) 1,392.0 9.03 1,342.0 7.76 1,427.0 10.86 106.33
* According to this survey, in 2008 there were 38,042,700 adult persons and 33,897,100 persons receiving income (89 receiving per hundred persons).
Source: Prepared by M.A. Durán using data from the Living Conditions Survey 2009 (INE 2010).
Only the widowhood pension, which is transferred to the surviving spouse, is higher on average for women than for men.
3.2.2. The capacity of households to acquire merchandise The expansion of the market economy occurs simultaneously with the externalisation of services which were traditionally pro- duced within the home. These include, among others, the services of providing food, cleaning, health care, education, security, trans- port, and obtaining credit.
Externalisation requires the creation of appropriate infrastruc- tures (restaurants, company canteens, hotels, cleaning companies, schools, hospitals, banks) and the training of specialists. Both the infrastructure and the training of specialists require copious invest- ment, which may be met by private, public, or non-profit-making entities. In principal, specialists provide services of higher quality than the non specialists who remain in the home, and their wages are also higher. If productivity increases considerably, the final price of the service may be lower than that of the service produced by the non-specialist, but the comparison of services produced by specialists and non-specialists frequently makes no sense, because they are dif- ferent services provided in different places and at different times.
Together with the availability of infrastructure, technology, and specialists, services replacing households’ benefit from mass pro- duction and the ensuing economies of scale. Externalisation has its
TAble 3.8: Index of gross monthly and hourly wages and salaries in 2009, by nationality*
(percentage)
Nacionality Monthly salary Hourly wage
(indices) (indices)
Total 100.0 100.0
Spain 102.1 102.2
Rest of Europa 78.6 73.9
Rest of world 66.7 65.7
* Wage earners who worked for less than one hour during the week prior to the interview.
Source: Prepared by M.A. Durán using data from the Living Conditions Survey 2009 (INE 2010).
spatial correlation in the transfer of the place in which the services are provided: from the household to other locations (the premises of the company, Public Administration, etc.). Nevertheless, some externalised services continue to be provided in the home by paid workers, both specialists and non-specialists.
The work which is carried out and consumed in the home, with- out becoming linked to goods or services which are subsequently resold in the market with added value, is usually known as unproduc- tive work, but this term is hardly appropriate. It leads to a conceptual confusion and has very negative connotations both morally and in terms of efficiency. It would be more appropriate to label it as work for the production of family self-consumption services.
The capacity of the household to contract services, both from specialists and from non-specialists depends on their relative level of income. When income is distributed very unequally, households from middle and high levels are able to purchase long-term services from workers at lower wage level, and very short-term services from workers at higher wage levels. Households with a low level of income are unable to purchase any type of service. They only gain access to the services if they are subsidised (the redistribution of collective goods through the State), or free (donations, volunteer work). In order to cover the rest of their needs, they are obliged to limit them- selves to those services which can be produced by the members of the household themselves.
If the distribution of income is relatively equal, only households which belong to the highest deciles are able to purchase long-term services. That is why constant pressure is exerted by large sectors of the population, which correspond to the intermediate deciles of income, to import work from labour markets in which the average price of work is lower, or where there is a greater degree of internal inequality. Or, in other words, having recourse to provincial, na- tional, or international immigration. In this aspect, households act in the same way as companies, seeking to reduce the cost of la- bour.
Comparison between individual incomes says little about real living conditions, because virtually the entire population lives in households and shares their income with the family members living with them, in addition to using the wealth and basic equipment
jointly. Some of the more precise sources of information on income refer to individual incomes, including the majority of tax sources.
Other sources, such as the Living Conditions Survey, are not so reli- able in respect of income, but they do permit an approach to the subject to be taken from the point of view of households.
The aggregation of the income which each member of the household earns, as well as income which is obtained jointly, is known as the household income. When this is divided by the number of household members, the average income per person is obtained.
And weighting the members of the household by the Oxford scale 45 (OECD), which takes into account age and relative position, gives what is known as the average income per unit of consumption (Tables 3.9, 3.10, and 3.11).
In Spain the lowest average income per household relates to single person households (they only obtain 50% of the average of all households), this is due to the fact that there are many elderly, widowed or retired persons who live alone. Nevertheless, their aver- age income per person is higher than all types of households (136.7% with respect to the average). They adapt to what they have, they benefit from certain public services (transport, medicine), their mortgages are paid, and they do not express any more anxiety or less satisfaction about making ends meet at the end of the month than the population on average (Fundación Encuentro 2010)46. Households in which more than two adults live together achieve the highest average income per households, but if they live with de- pendent children their income per person is only 80% of the aver- age. Households in which a single adult is responsible for depend- ent children have average incomes, but their income per person is the lowest of all types of household (66.9% of the average).
3.2.3. The poverty threshold: multi-dimensional indicators Research into poverty, which gathered new strength in 2010, the World Anti-Poverty Year, has focused on economic poverty, taking
45 The Oxford scale, also known as the OECD scale, assigns 1 point to the first adult in the household, 0.7 to each of the remaining adults, and 0.3 to each child below the age of 14 years old.
46 If compared with the income per capita it is 16% lower, if compared with income per household, it is 20% lower.
individual and family income as the principal indicator, contribut- ing to a lack of satisfaction among users and poor utility for the purposes of the adoption of public policies. Indicators of poverty, whatever they may be, generate considerable controversy, and even more so if they are used to make comparisons at a world-wide level,
TAble 3.9: Average net annual income per household, per person, and per consumption unit (2009), by age and gender of reference person (average income in Euros)
Average Percentage Average Percentage Average Percentage
income per income per income per
household person consumption
unit
Total 26,500 100.0 9,865 100.0 14,948 100.0
From 16 to 29
years of age 24,434 92.2 10,737 108.8 15,185 101.6 From 30 a 44
years of age 28,254 106.6 9,627 97.6 15,372 102.8
From 45 to 64
years of age 30,595 115.5 10,120 102.6 15,502 103.7 65 years or more 19,245 72.6 9,555 96.9 12,997 86.9
Men
Total 27,931 100.0 9,939 100.0 15,190 100.0 From 16 to 29
years of age 23,322 83.5 10,671 107.4 14,763 97.2
From 30 to 44
years of age 28,422 121.9 9,814 92.0 15,616 105.8
From 45 to 64
years of age 31,845 112.0 10,146 103.4 15,687 100.5 65 years or more 22,042 69.2 9,552 94.1 13,442 85.7 Women
Total 24,272 100.0 9,737 100.0 14,524 100.0 From 16 a 29
years of age 25,852 106.5 10,815 111.1 15,677 107.9 From 30 a 44
years of age 27,968 108.2 9,320 86.2 14,971 95.5
From 45 a 64
years of age 28,334 101.3 10,069 108.0 15,130 101.1 65 years or more 15,876 56.0 9,559 94.9 12,253 81.0 Source: Prepared by M.A. Durán using data from the Living Conditions Survey 2009 (INE 2010).
TAble 3.10: Average net annual income per household, per person, and per consumption unit (2009), by size of household
(average income in Euros)
Average Percentage Average Percentage Average Percentage
income per income per income per
household person consumprion
unit
Total 26,500 100.0 9,865 100.0 14,948 100.0
1 member 13,457 50.8 13,457 136.4 13,457 90.0
2 members 24,137 179.4 12,069 89.7 16,128 119.8
3 members 30,186 125.1 10,062 83.4 15,694 97.3
4 members 33,811 112.0 8,453 84.0 14,609 93.1
5 members or more 36,278 107.3 6,890 81.5 12,425 85.1 Source: Prepared by M.A. Durán using data from the Living Conditions Survey 2009 (INE 2010).
or between countries which are very different or of unequal wealth.
Some critics (Deaton 2010) propose that the demarcation of the
“lines of extreme poverty” (a dollar a day, according to the Millen- nium Development Objectives, MDO, of the United Nations) should be revised, as should the meaning of the “purchasing parity indices”, together with specific indicators such as the “housing value computation”. Deaton proposes that greater use should be made of subjective indicators of the feeling of poverty (given that he is the president of the American Economic Association – AEA, this should be taken into consideration). Some indicators of poverty by house- hold have been refined by weighting them for the phase in the life cycle and age of the members of the household. The availability of comparable sources of statistics, for example the European Com- munity Household Panel (PHOGUE), has facilitated international comparative analysis in some regions. Following a line of research popularised by Amartya Sen, poverty is analysed from the point of view of incidence, intensity, and duration. More recent research has been dynamic, that is to say, it focuses on the processes of getting into and out of poverty, and also on estimates of risk, and the social and economic policies intended to prevent it.
The definition and operativisation of poverty determines any subsequent estimate of its volume or intensity. Some indicators refer
TAble 3.11: Income per household, per person, and per consumption unit, by type of household
(Euros)
Average Percentage Average Percentage Average Percentage
income per income per income per
household person consumption
unit
Total 26,500 100.0 9,865 100.0 14,948 100.0
Single-person
households 13,457 50.8 13,457 136.4 13,457 90.0
1 adult with 1 or more dependent
children 18,112 134.6 7,447 55.3 11,598 86.2
2 adults without dependent
children 24,389 134.7 12,194 163.7 16,259 140.2
2 adults with 1 or more dependent
children* 30,230 123.9 8,230 67.5 14,516 89.3
Other households with dependent
children 35,835 118.5 7,971 96.9 13,453 92.7
Other households without dependent
children 35,030 97.8 10,367 130.1 15,991 118.9
* Dependent is understood to mean all children of less than 16 years of age and persons from 18 to 24 years of age who are not economically active at least one of whose parents is a member of the household.
Source: Prepared by M.A. Durán using data from the Living Conditions Survey 2009 (INE 2010).
to absolute poverty (for example, a population which lives on less than one or two dollars per day), but the majority are proportional to the average income of the reference group or country. The Multi-dimen- sional Poverty Index (MPI) was established by the Oxford Poverty and Human Development Initiative (OPHI), and has been calculated for more than one hundred countries. Even where there is a general consensus that poverty cannot be understood merely as the scarcity of consumption of market goods, and that multi-dimensional re- search is required, the MPI has received substantive criticism. In the opinion of Ravaillon, the index suffers from two fundamental prob- lems. The first is purely methodological in that, for reasons of inter- nal consistency it can only be prepared using materials extracted
from the same survey, and this prevents it from using other, better, sources for specific dimensions of poverty. The second is more seri- ous, in that it contains an implicit leveller of its components which is highly disputable. Of the ten components of the index, two refer to health (infant mortality and malnutrition), two to education (enrol- ment rates and years of schooling), and six to living conditions, among which the wealth of the household and its access to public services are included. By giving the same weight to each of these three groups, it turns out that for example, the death of one child is measured by a similar scale as having a dirty floor, or the increase of the average lifespan in a rich country has a value four or five times greater than the same increase in a poor country (because it is val- ued on the basis of GDP). For the purposes of the adoption of pol- icy decisions at a country level, the MPI is of limited use.
The response of the authors to the criticisms outlined is that the MPI is an improvement on the HDI because it provides a synthetic view which can be applied to any subject (person, ethnic group, country), it does not measure achievement but deprivation, and moreover, it can be broken down and referred to a lower level of ag- gregation. In the crucial question of the assignment of weighting to each sub-index, the defence of the MPI is coherent; a weighting is assigned instead of a price because of the enormous difficulty in as- cribing a monetary value to conditions which are not purchased and sold in the market (illiteracy, morbidity), and which vary enormous- ly between countries. Although it falls down as regards the quality of its sources in that it is limited to one single survey, the MPI does make it possible to know how much deprivation is accumulating in any one person or group, and that is not possible with the MDOs.
In the debate on poverty, the positions are clear and open, to be improved by means of public discussion and new theoretical or empirical contributions. It can be foreseen that in the near future other dimensions of poverty may be added where currently there is no data, such as violence, work in the black economy, lack of em- powerment, isolation, or humiliation (Alkire 2010).