The Dynamics of Child Poverty: Britain and Germany Compared *

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INTRODUCTION

Germany and the UK are the two largest and most economically successful nations in the EU. However, Germany does better than Britain in protecting children from the problems of low income. For example, according to the Statistical Office of the European Community, in 1993, there were 13 % of German children living in poor households but in Britain the proportion was more than double this figure, 32% (Eurostat, 1997, Figure 3; the 12 country EU-average was 20%). Moreover, in Britain throughout the 1980s and 1990s, the poverty rate among children in each year was higher than the poverty rate for the population as a whole; in Germany, the same differential existed but was smaller (Jenkins et al., 2001). From these cross-sectional perspectives, Germany appears to do better for its children than Britain does. But ran this conclusion be sustained once we take account of differences in poverty dynamics between the countries? To what extent are there differences in patterns of movement into and out of poverty by children? This paper provides answers to these questions using data from the British Household Panel Survey and the German Socio-Economic Panel.

Our findings are intended as a source of descriptive information about Anglo-German differences in child poverty: our utilization of fully comparable data, and our combination of longitudinal and cross-national comparative perspectives are distinctive contributions. Our quantitative findings complement detailed studies focusing on cross-national differences in institutions--an excellent example of which is Daly (2000).

Most quantitative research to date for Britain and Germany has taken a cross-sectional perspective. Exceptions include Jarvis and Jenkins (1997) and Krause (1998) but neither focused on children. Hill and Jenkins (2001) and Schluter (2001) studied different aspects of child poverty dynamics for each of the two countries separately. Some explicitly cross-national perspectives on child poverty dynamics for Britain and Germany were provided by Bradbury et al. (2001), but in less depth than here (they consider a larger number of countries instead). (1) Our results should help non-UK readers understand why it is that child poverty reduction has become such a top-priority policy issue in Britain. The current UK government has pledged to halve the number of poor children within ten years and to eliminate child poverty altogether within twenty years (Department of Social Security, 1999).

There are clear differences in socio-economic structure and organization between Britain and Germany. In particular Germany's welfare state is founded on social insurance principles, whereas Britain relies much more on means-tested social assistance. And Britain's labour market is more flexible than Germany's and rates of household formation and dissolution are also greater (Jenkins and Schluter, 2003). Examination of cross-national differences in patterns of movements into and out of poverty can help illuminate the relationship between these differences in welfare states, labour and marriage markets and differences in child poverty rates. The analysis reported here is a 'prequel' to further analysis of this claim (Jenkins and Schluter, 2003), and we hope that it will stimulate further and more detailed examination of cross-national child poverty differences.

Section 2 discusses the data and definitions used in our analysis. Section 3 provides information about Anglo-German differences in trends in child poverty--a cross-sectional perspective. This is background to the empirical heart of the paper. Section 4 compares the patterns of movement into and out of child poverty along a number of different dimensions. In Section 5 we report analysis of Anglo-German differences in the correlates of these movements, focusing on changes in household members' labour market attachment and earnings, and changes in their household composition. …