Efforts to reduce child poverty have been more effective in Britain than in the United States,
according to new research by Richard Dickens and David Ellwood, published in the June
2003 issue of the Economic Journal. This is because although both the Blair and Clinton
governments used welfare reform to lift people out of poverty by getting them into work, the
Blair approach also increased benefits for non-working families. The greater reliance on
carrots rather than sticks meant that while child poverty fell by a similar amount in the two
countries, it fell much faster in Britain.
Child poverty more than doubled in Britain from the late 1970s so that when the New Labour
government came to power in 1997, a third of children were living in poverty and a fifth in
households with no working adult. The new Chancellor of the Exchequer pledged to halve
child poverty within a decade and to eradicate it completely within two. The government set
about introducing a range of welfare reforms aimed at reducing child poverty. Most of these
centred on getting poor families back into work but in addition, benefit rates for those out of
work with children were also raised substantially. As a consequence, child poverty rates have
fallen over the last few years.
In the United States, child poverty rose from the late 1970s, albeit by much less than in
Britain. When the Clinton government came to power in 1992, they introduced a range of
welfare reforms aimed at forcing poor families back into work. The goal was not explicitly
poverty reduction but to reduce the number of people on welfare and increase the number in
work. Consequently, child poverty fell over the rest of the decade.
Dickens and Ellwood investigate the reasons for these changes in child poverty, examining
the role of demographic changes, wage changes, changes in work patterns and changes in
government benefits.
The demographic composition of the population has changed in both Britain and the United
States. More children now live in single parent households, which tend to be poorer. This
played a significant role in rising poverty in the pre-Blair and Clinton periods. Increasing wage
differences between the low and high paid also contributed to rising child poverty. And in
Britain, where the number of households without work increased substantially, changing work
patterns led to increases in child poverty. This was offset somewhat by changes to the benefit
system that reduced child poverty below what it would have been.
Both the Blair and Clinton governments introduced welfare reforms that increased work
incentives. The Clinton approach was to raise in-work support for the poor but to cut back aid
to non-working families. The Blair approach also raised support for working poor families but
benefits for non-working families were also raised. The British approach was much more
reliant on carrots than sticks.
The result was a significant increase in work in both countries among disadvantaged groups.
In addition, child poverty fell by a similar amount in the two countries but much faster in
Britain. And the mechanism by which poverty fell was very different in each country. In the
United States, some of the fall is attributable to changing demographic composition but the
majority is attributable to increases in work. In Britain, work helped to reduce child poverty
somewhat but the largest impact comes from increases in benefit payments to families with
children.
The fact that Britain was able to achieve similar child poverty reduction over a much shorter
time period suggests that the approach here is more effective. In the United States, work has
risen substantially but child poverty has not fallen by perhaps as much as would be hoped, as
more families are shifted from out of work to in-work poverty. In Britain, an increase in work,
coupled with some fairly large increases in benefits, has resulted in a faster fall in child
poverty.
These are the first significant falls in child poverty for decades. It remains to be seen whether
this trend can continue to achieve the child poverty targets.
ENDS
Notes for Editors: ‘Child Poverty in Britain and the United States’ by Richard Dickens and
David T Ellwood is published in the June 2003 issue of the Economic Journal.
Dickens is at the London School of Economics (LSE); Ellwood is at Harvard University.
For Further Information: contact Richard Dickens on 020-7955-7773 (email:
R.Dickens@lse.ac.uk); or RES Media Consultant Romesh Vaitilingam on 0117-983-9770 or
07768-661095 (email: romesh@compuserve.com).