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Higher inequality in the UK linked to higher poverty
Double Trouble report by Abigail McKnight, Magali Duque and Mark Rucci, commissioned by Oxfam
Both inequality and poverty are now on the rise again and predicted to increase
further in the next 5 to 15 years, but it has never been established if the two
are directly linked. Researchers
McKnight, Magali Duque and Mark Rucci explored the different types of
inequality including income inequality and concentration of wealth, over the
period 1961 to 2016.
Double Trouble, which was commissioned by Oxfam, shows that a positive
correlation between income inequality and income poverty in the UK can be
clearly established. Statistical analysis found that, on average, during the
last 50 years a one point increase in income inequality - as measured using the
Gini coefficient – was associated with an increase in relative poverty of 0.6
The report also examines the consequences of inequality, and in particular
points to evidence that it leads to lower overall economic growth as well as
negative consequences for some individuals and their families, and wider
society. Higher levels of inequality are shown to sustain higher levels of
poverty through a variety of mechanisms.
One of these is the growing polarisation between ‘the rich’ and ‘the
poor’. This affects people’s perception of
inequality, results in a lack of understanding about what it is like to live on
a low income, and this lack of empathy has important implications for support
for public policy designed to reduce inequality and tackle poverty.
News Posted: 09 November 2017
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Help to Buy has had little impact on extending home ownership to lower income households
New blog post by Dr Bert Provan
The Government’s pledge to extend
the “Help to Buy” programme is a further mistaken investment in a policy which
has had little impact on extending home ownership to lower income households,
Bert Provan. So, the £2bn investment in “social and affordable
housing” is, while welcome, wholly inadequate to meet the pressing and
increasing need for low cost rented housing for households in most need.
LSE British Politics and Policy blog
News Posted: 03 November 2017
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Race Disparity Audit
launch of Ethnicity Facts and Figures website
The UK Government’s
Race Disparity Audit website
'Ethnicity Facts and Figures’
was launched today, providing some
previously unavailable data. CASE researchers were engaged in the developmental
process of the Audit. Measuring inequalities within and between ethnic groups
has been part of our previous work on the
Equality Measurement Framework
that Dr Tania Burchardt and Dr Polly Vizard helped to develop, and on the
work of the
National Equality Panel chaired by
Professor John Hills.
News Posted: 10 October 2017
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Heat, greed and human need: climate change, capitalism and sustainable wellbeing
New book by Professor Ian Gough
Wednesday November 8th at
6.30-8.00 pm followed by a wine reception
Venue: Shaw Library at London School of Economics, London
Professor Ian Gough (Visiting Professor, Centre for the Analysis of
Social Exclusion, and Associate, Grantham Research Institute, LSE) presents his new
book (Edward Elgar 2017).
This book builds an essential bridge between climate change and social
policy. Combining ethics and human need theory with political economy and
climate science, it offers a long-term, interdisciplinary analysis of the
prospects for sustainable development and social justice. Beyond ‘green growth’
(which assumes an unprecedented rise in the emissions efficiency of production)
it envisages two further policy stages vital for rich countries: a progressive
‘recomposition’ of consumption, and a post-growth ceiling on demand.
Please book your place at this event using Eventbrite
Chair: Professor Dame
Vice-chair of the Grantham Research Institute on Climate Change and the
Environment at the LSE
Discussant: Kate Raworth,
Oxford University Environmental Change Institute; author of Doughnut
Event hashtag: #HeatGreedHumanNeed
News Posted: 29 September 2017
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Economic Decisions Talk at the British Science Festival
Oriana Bandiera, Nava Ashraf, Maitreesh Ghatak
People aren't always as selfish as economists assume. This event was part of the British
Science Festival held in Brighton in September 2017, and examined how our social preferences affect our decision making and explored the economic consequences.
The expert panel, including Oriana Bandiera, Nava Ashraf, and Maitreesh Ghatak, discussed how we can incorporate personal motivations into economic models and discussed the implications on the organisation of firms, the use of monetary incentives, and the delivery of public services.
You can listen to the discussion from this link
News Posted: 07 September 2017
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New Anthony Atkinson Chair of Economics at LSE
We are proud to announce the creation of the new Anthony Atkinson Chair in
Economics at the LSE. The chair is named in memory of Professor Anthony
Atkinson, who sadly died in January this year. Professor Atkinson was a giant in
the world of economics. His work has has a profound influence on the study of
inequality, and on the thinking of the next generation of academic economists
across the globe.
The Chair has been awarded to
Bandiera, Director of STICERD and Professor of Economics. STICERD was home
to Tony for much of his career- he served as Director for many years and always
remained close to the centre. Oriana worked closely with Tony and recalls that
perfect alignment of intellect and morality gave him the calm and clarity to
tackle the difficult path from rigorous research to effective policy design."
News Posted: 21 July 2017
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CASE Report launch.
Income directly affects children's outcomes
Poorer children have worse cognitive, social-behavioural and health outcomes because they are poor, and not just because poverty is correlated with other household and parental characteristics, according to a new report from the London School of Economics and Political Science (LSE).
Kerris Cooper and Kitty Stewart of the Centre for the Analysis of Social Exclusion (CASE) and the Department of Social Policy at LSE found the strong evidence of the causal effect between household income and children’s outcomes after reviewing 61 studies from OECD countries including the US, UK, Australia, and Germany.
Ms Cooper commented: “There is abundant evidence that children growing up in lower income households do less well than their peers on a range of wider outcomes, including measures of health and education. We wanted to find out if money is important in itself, or do these associations simply reflect other differences between richer and poorer households, such as levels of parental education or attitudes towards parenting.
“Our conclusions are clear: there is a strong causal effect. Money makes a difference to children’s outcomes.”
The report, Does Money Affect Children’s Outcomes: An Update, shows that income itself is important for children’s cognitive development, physical health, and social and behavioural development.
Looking to explain why income matters, they found evidence in support of two central theories, one relating to parents’ ability to invest in goods and services that further child development, and the other relating to the stress and anxiety parents suffer caused by low income. There is particularly strong evidence that increasing income is likely to reduce maternal depression, which is known to be important for children’s outcomes.
In terms of how much money matters they found effect sizes were similar to spending on schools, however the effects of increased income are likely to be wider-reaching as income affects more household members and impacts children’s outcomes across multiple domains as well as impacting the home environment.
They also confidently conclude that increases in income make more difference to families who have low income to begin with.
The report, funded by the Joseph Rowntree Foundation, updates an original review from 2013, with the most recently available evidence. The authors conclude that reducing income poverty would have “important and measurable effects both on children’s environment and on their development”.
It says: “Given rising levels of child poverty in the UK, and much steeper increases projected for the next few years, this conclusion could not be more important or topical, especially in light of stated government commitment to promoting social mobility. Certainly any strategy that seeks to improve life chances and equalise opportunities for children without turning the tide against growing levels of child poverty is going to face an uphill struggle and place an even greater burden on services that seek to alleviate various negative effects of inadequate family resources.
The report is available here: http://sticerd.lse.ac.uk/case/_new/research/money_matters/report.asp
News Posted: 12 July 2017
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Low-cost schemes to help people get on
the housing ladder have ‘little' impact on social mobility
Flagship Government schemes to help more people get on the UK housing ladder have little impact on improving social mobility as better-off buyers are most likely to benefit from the support.
A new LSE report for the Social Mobility Commission into the impact of low-cost homeownership schemes has found that those benefitting from schemes - such as Help to Buy - earn more than one and half times the national working age median income.
Around three in five first time buyers said they would have bought anyway and that the scheme merely enabled them to buy a better property, or one in a better area, than they were originally looking for.
In the UK, promoting ownership for first time buyers is a current Government priority. Since the 1990s, around 1.8 million properties have moved into ownership through right to buy, 200,000 were provided through the affordable homes home ownership route, and 300,000 households were assisted through reduced costs of attaining ownership.
The report builds on prevous Government-commissioned research which found that Help to Buy Equity Loans had generated 43 per cent additional new homes over and above what would have been built in the absence of the policy - contributing 14 per cent to new build output.
However that research found that the average income for these Help to Buy buyers was £41,323 - similar to other first time buyers who had average incomes of £39,834. Fewer than half of all working age households have incomes over £30,000, meaning that this scheme is unlikely to be able to help those households without more specific targeting.
This latest research points out that the high cost of housing means many low-cost homeownership schemes are beyond the reach of almost all families on average earnings. Only 19 per cent of Help to Buy Equity Loan completions to date were for homes worth less than £150,000. If households put down a five per cent deposit, the researchers found that this exceeds the 40 per cent limit of affordability for a median-income working age household.
It recommends new action to help more low-income buyers including targeting financial subsidies on households with incomes up to 1.5 times median income and setting different levels for different regions.
It calls on the Government to provide more advice and guidance to households without a history of ownership to help them into ownership by managing risks and expectations. It also calls for restricting access to subsidies where a first time buyer has unfettered access to alternative sources of financial and other support to become an owner, such as capital from parents or other relatives.
Earlier this year, the Social Mobility Commission published research which found that the proportion of first time buyers relying on inherited wealth or loans from the bank of ‘mum and dad’ has reached an historic high and the trend looks set to continue. Increasingly, young people are relying on their parents to help them get a foot on the housing ladder. Over a third of first time buyers in England (34 per cent) now turn to family for a financial gift or loan to help them buy their home compared to one in five (20 per cent) seven years ago. A further one in ten rely on inherited wealth.
For 25-29 year olds, home ownership has fallen by more than half in the last 25 years from 63 per cent in 1990 to 31 per cent most recently. Many of those who do manage to buy eventually can only do so at an older age.
The Rt Hon Alan Milburn, chair of the Social Mobility Commission, said: “This research provides new evidence that the UK housing market is exacerbating inequality and impeding social mobility.
“While it is welcome that the Government is acting to help young people get on the housing ladder, current schemes are doing far too little to help those on low incomes to become home owners.
“The intent is good but the execution is poor. Changes to the existing schemes are needed if they are to do more to help more lower income young people and families become owner-occupiers. Without radical action, particularly on housing supply, the aspiration that millions of ordinary people have to own their own home will be thwarted. ”
In its State of the Nation 2016 report, the Commission recommended that the Government should:
- Commit to a target of three million homes being built over the next decade with one-third - or a million homes - being commissioned by the public sector.
- Expand the sale of public sector land for new homes and allow targeted house-building on Green Belt land.
- Modify its Starter Home initiative to focus on households with average incomes and ensure these homes when sold are available at the same discount to other low-income households.
- Introduce tax incentives to encourage longer private sector tenancies.
- Complement the Heseltine Panel’s plans to redevelop the worst estates with a matching £140 million fund to improve the opportunities social tenants have to get work.
The report’s lead author Dr Bert Provan, from LSE's Centre for Analysis of Social Exclusion and the Department of Social Policy, said: “Most research on low-lost home ownership schemes has focused on the age profile of first time buyers and impact on supply. This research looks at whether they open up home ownership to different and more diverse groups of low income households in the UK. It finds that while there are some positive effects of such schemes - such as increasing supply - the impact on improving social mobility is small.”
The report is available here: www.gov.uk/government/organisations/social-mobility-commission
News Posted: 03 July 2017
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Call for papers
1st TCD/LSE/CEPR Workshop in Development Economics 18-19 September, 2017
Venue: Trinity College Dublin
Dates: 18-19 September, 2017
Scientific Organisers: Robin Burgess (LSE and CEPR), Fadi Hassan (Trinity College Dublin) and Carol Newman (Trinity College Dublin)
Keynote speakers: David McKenzie (World Bank and CEPR) and Imran Rasul (UCL and CEPR)
We invite submissions for this workshop from interested researchers on any topic in the area of Development Economics. The deadline for submission is 12 June 2017. We accept both full-length papers and extended abstracts for projects at an advanced stage.
The workshop is organised byTIME (Trinity College Dublin), STICERD(London School of Economics) and CEPR and is funded by Irish Aid. The aim of the workshop is to bring together researchers in different fields of development economics to discuss current issues in development. Topics include, but are not limited to: agriculture, climate change, conflict, education, firms' organization, finance, gender, health, migration, networks, productivity, public finance, and trade. The workshop will take place at Trinity College Dublin on 18-19 September 2017.
CALL FOR PAPERS: Deadline - Monday 12 June 2017
The sponsoring institutions can cover accommodation and travel according to the CEPR guidelines for presenters and discussants. However, there is limited travel and accommodation funding available, and we encourage more senior participants to use their own grants to cover costs. Please indicate in your reply whether you will be able to cover your own costs, or whether you will require funding to attend.
How to Apply
If you would like to submit a paper, or attend without submitting a paper, please email your submission to Chloe Smith (firstname.lastname@example.org) with the following subject "Paper Submission: 1st TCD/LSE/CEPR Workshop in Development Economics".
Please include the paper you wish to submit in the email, or indicate if you would like to participate as a general participant. Also state if travel/accommodation funding is required and if you are willing to act as a discussant.
If you wish to attend please do ensure that your application and paper reach CEPR by Monday 12 June 2017. We aim to notify successful applicants by the end of June/early July 2017.
News Posted: 17 May 2017
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Our lives keep on changing - yet the welfare myth of 'them' and 'us' persists, John Hills
When ‘welfare’ is discussed, the theme of a divided
‘them’ and ‘us’ of those who pay in, and those who pay out – runs across British
political debate, a hundred tabloid front pages and through a dozen TV
programmes focussed on an assumed unchanging ‘welfare-dependent’ underclass.
But the evidence looks rather different, for example
only one pound in every £14.70 we spend on the welfare state now goes on cash
payments to out of work non-pensioners. In reality our lives are ever-changing. John Hills
discusses this 'welfare myth' in a post for the
LSE British Politics and Policy
blog to mark the release of a revised and updated edition of his book
Good Times, Bad Times:
the welfare myth of them and us.
News Posted: 22 February 2017
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The Relationship between Inequality and Poverty: mechanisms and policy options
Wednesday 8th February 2017
Presenters: Dr Abigail McKnight and Dr Eleni Karagiannaki
Chair: Steve Machin, Professor of Economics,
London School of Economics; Director, Centre for Economic Performance
Discussants: Chris Goulden, Joseph Rowntree
Foundation, Deputy Director, Policy and Research and Dr Chiara Mariotti, Oxfam
Inequality Policy Manager
This lecture examines the empirical relationship
between economic inequality and poverty across countries and over time, paying
attention to different measurement issues. It then considers a range of
potential mechanisms driving this relationship and explores policy options.
Eleni Karagiannaki is
a Research Fellow at the Centre for Analysis of Social Exclusion at LSE. Her
research focuses on income and wealth inequality and poverty and socio-economic
Abigail McKnight is
an Associate Professorial Research Fellow and Associate Director of Centre for
Analysis of Social Exclusion at LSE where she has worked since 1999. Her
research interests include inequality, poverty, wealth, social mobility and
Further information about this event
News Posted: 30 January 2017
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Professor Sir Tony Atkinson
It is with great sadness that we
announce Professor Sir Tony Atkinson,
Centennial Professor at LSE, died on Sunday 1 January 2017.
Atkinson joined STICERD in 1980 where he was chairman between 1981 and 1987 and
an active affiliate for the following thirty years. Throughout these years, many
CASE researchers and associates had the privilege to learn from his sharp mind,
dedication to policy and great kindness. Tony influenced our thinking on
poverty, inequality, social mobility and public policy. By establishing the
Welfare State programme in 1985 Tony played an important role in the foundation
of CASE as an independent research centre in 1997. He also appointed Professor
John Hills who would later go on to become CASE’s Director.
contributed 31 valuable papers to our publications over the years, as part of the Welfare
State Programme and later as CASEpapers,
these are available here.
You can explore STICERD’s wall of remembrance for Professor Sir Tony Atkinson
News Posted: 05 January 2017
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