Intergenerational transmission of disadvantage statistics

From Statistics Explained

Is the likelihood of poverty inherited?


Statistics in focus 27/2013; Authors: Sigita GRUNDIZA, Cristina LOPEZ VILAPLANA
ISSN:2314-9647  Catalogue number:KS-SF-13-027-EN-N

Figure 1: Shares of the whole population of adults aged 25-59, EU-28. Cross sections of the shares of people having low level of education, being not at work, and having low ability to make ends meet, 2011 - Source: Eurostat
Figure 2: AROP rate for adults with low education level as compared with the total AROP rate by country, age group 25-59, 2011
- Source: Eurostat
Figure 3: Highest level of education of the parents by their descendants’ level of education, shares, EU-28, age group 25-59, 2011 - Source: Eurostat
Figure 4: Low educated parents by their descendants’ level of education, age group 25-59, 2011 - Source: Eurostat
Figure 5: High educated parents by their descendants’ level of education, age group 25-59, 2011 - Source: Eurostat
Figure 6: The association index of being low educated when having low educated parents compared to high educated parents, age group 25-59, 2011 - Source: Eurostat
Figure 7: Low educated parents by their descendants’ level of education, descendent's age group 25-59, 2011 - Countries where the persistence of parents’ low education is higher for women - Source: Eurostat
Figure 8: Low educated parents by their descendants’ level of education, descendent's age group 25-59, 2011 - Countries where the persistence of parents’ low education is higher for men - Source: Eurostat
Figure 9: Persistence of parents’ low educational attainment, 2011 - Countries where the persistence is higher for population aged 45-59 - Source: Eurostat
Figure 10: Persistence of parents’ low educational attainment, 2011 - Countries where the persistence is higher for population aged 25-34 - Source: Eurostat
Figure 11: Ability of making ends meet for people under poverty threshold (AROP), age group 25-59, 2011 - Source: Eurostat
Figure 12: Ability of making ends meet now having low ability to make ends meet in childhood, age group 25-59, 2011 - Source: Eurostat
Figure 13: Ability of making ends meet now having high ability to make ends meet in childhood, age group 25-59, 2011 - Source: Eurostat
Figure 14: Ability of making ends meet now having low ability to make ends meet in childhood, by country, age group 25-59, 2011 - Source: Eurostat
Figure 15: Ability of making ends meet now having high ability to make ends meet in childhood, by country, age group 25-59, 2011 - Source: Eurostat
Table 1: Association indices for current low ability to make ends meet by country, age group and gender, 2011 - Source: Eurostat
Figure 16: Current adults by their parents’ economic activity in childhood, age group 25-59, 2011 - Source: Eurostat
Figure 17: Proportion of current adults “not at work” those adults who had both parents at work and those who had at least one parent not at work in the childhood, age group 25-59, 2011 - Source: Eurostat
Figure 18: Relationship between proportion of adults with at least one parent not at work (left axis) and association index for being not at work by country, 2011 - Source: Eurostat

One of the headline targets of the Europe 2020 strategy for jobs and smart, sustainable and inclusive growth is the reduction of poverty by lifting at least 20 million people out of the risk of poverty or social exclusion by 2020. Poverty is a multidimensional socioeconomic phenomenon caused both by aggregated factors such as macroeconomic, social and labour policies and by individual factors like level of education, health or social interaction in society. The analysis of intergenerational disadvantages is aimed at measuring the extent of transmission or persistence of individual factors through generations. The European Union statistics on income and living conditions (EU-SILC) 2011 data are used for the purpose of the analysis.

In the EU-28 the transmission of the level of education from parents to children is 34.2 % for a low level of education, 59.2 % for a medium level, and 63.4 % for a high level. Even though the persistence of a low level of education is the smallest among the three education levels, the share of respondents with a low level of education was much higher among those whose parents also had a low level of education (34.2 %) than among those whose parents had a high level of education (3.4 %).

The transmission of a low ability to make ends meet from parents to their children, currently adults, significantly exceeds the transmission of a high ability to make ends meet, at 68.9 % and 55.9 % respectively.

Finally, in the EU-28, on average 28.6 % of adults having at least one parent not at work in their childhood are not at work as well.

Main statistical findings

Intergenerational transmission of disadvantages in this analysis is defined as the persistence of a low level of education, a low ability to make ends meet, or the economic situation “not at work” of individuals through two generations – from parents to their children.

The three individual factors chosen are interlinked with each other and are important for analysis of the causes of poverty. Figure 1 shows the 2011 shares for the EU-28 population of current adults being not at work, having a low level of education and a low ability to make ends meet. For example, in the EU-28, 22.0 % of current adults have a low level of education, 15.9 % of current adults have a low education and a low ability to make ends meet, and 9.3 % of current adults have low education and are not at work.

The main focus of the analysis is on the persistence of disadvantages through two generations; however on the other hand there is also a significant transmission of advantages.

Education

The education level of parents has a strong impact on the education level of their children. This can be explained by the parents' ability to financially support their children's studies and/or to pass a perception of the importance of education to their children. In turn, the education level is one of the most important individual factors for adults in reducing the risk of poverty and being able to secure acceptable living conditions for themselves and their families. State policies towards the promotion of initatives for higher educational levels for children could limit to some extent the effect of the transmission of a low[1] education level through generations.

In EU-28, the association index for being at risk of poverty[2] (AROP)[3] is more than 3 for adults having a low level of education compared with adults having a high level of education, meaning that a low level of education increases the probability of being poor in most of the countries (see Figure 2). In 2011, in EU-28 the AROP rate was 16.9 %, while the AROP rate for low educated people was 27.6 % (age group 25-59). It should be noted that the significance of the effect of low education varies from country to country.

Persistence of low educational attainment through generations

The persistence of educational attainment from parents to current adults in this analysis is defined as the share of children having the same level of education as the highest level of education of their parents (or the level of education of a single parent). For example, if the mother of a current adult had a medium level of education and the father had a low level of education, the medium level of education would be used as the reference for the parents of this current adult in the analysis.

In 2011, 54.2 % of current adults in the EU-28 had parents with low education, 29.5 % had parents with medium education and 16.3 % had parents with high education.

In the EU-28 the persistence of high educational attainment (63.4 %) is the most significant among the education groups (see Figure 3). The higher is the educational level of the parents, the higher is the rate of persistence: the persistence of medium educational attainment is 59.2 % and of low educational attainment only 34.2 %. The persistence of low educational attainment is the smallest among the three levels and shows that the level of education in general increases between the generations. However, it also shows that if a person is born into a family with low educated parents, the possibility to be low educated themselves is 34.2 %, while if the parents had high education, the possibility to be low educated is just 3.4 %.

The range and extent of persistence of educational attainment varies among Member States (see Figure 4 and Figure 5). The persistence of a low education of the parents is more than 40 % in five countries, with the largest persistence in Malta (73.5 %) and Portugal (68.4 %). The persistence of low education is less than 20 % in nine countries, with the smallest in Lithuania (10.2 %), the Czech Republic (10.8 %), and Sweden (11.3 %).

The persistence of a high education level of the parents is above 70 % in ten countries. The share of low educated descendants among high educated parents is small almost in all countries, except Norway (11.1 %) and Malta (25.6 %). In eight countries, there are almost no low educated descendants of high educated parents, with shares below 2 %.

A low education level of current adults is related to the level of education of their parents in all the Member States. In 2011, in the EU-28, the association index for being low educated[4] was 14.7 for adults having low educated parents compared with those having parents with high level of education. In Bulgaria and Croatia, however, the association index was more than 40, while in Norway, Estonia, Denmark and Finland, it was less than 5. A large value of the association index for being low educated means a strong impact of a low education level of parents on current adults.

Gender differences in the persistence of parents’ low educational attainment

The differences between genders in the persistence of low educational attainment of parents are minor (less than 5 %) in more than half of the countries (16 out of 31). In 10 out of the remaining 15 countries, the persistence of a low education level of parents is higher for females than for males (see Figure 7). In the other 5 countries, it is higher for males. The most significant gender differences are found in Austria (20pp higher for females) (see Figure 7) and in Ireland (14pp higher for males) (see Figure 8).

Age differences in the persistence of parents’ low educational attainment

In most countries (26 out of 31), there is a notable (higher than 5 %) difference between the persistence of a low educational attainment of parents between age groups, in particular between current adults aged 45-59 and those aged 25-34. In 17 out of 26 countries, the persistence of a low education level is higher for those aged 45-59 than for those aged 25-34 (Figure 9 and Figure 10). However, the largest differences between persistence in age groups are to be found in the countries where the persistence of a low education attainment among those aged 25-34 is higher than for those aged 45-59: Bulgaria (29pp higher), Lithuania (33pp) and Latvia (41pp).

In the countries where the persistence of low educational attainment for those aged 45-59 is higher than for those aged 25-34, the greatest age differences are in Portugal (28pp higher), Malta (25pp), Denmark (24pp) and Ireland (24pp).

Making ends meets

The EU Member States differ in the distribution of the ability to make ends meet among the population below the AROP threshold.

Figure 11 shows the ability to make ends meet[5] for adults under the AROP rate in 2011. In most countries being under the AROP threshold and a low ability to make ends meet are positively related. In the EU-28, 80.0 % of people under the AROP threshold reported a low ability to make ends meet. The highest level of people having a low ability to make ends meet, and at the same time being under the AROP threshold, is observed in Bulgaria, Latvia, Romania, Greece and Hungary - above 97 % of the population - while in Sweden and Denmark the proportion is around 50 %.

Generally, the relationship between being under the AROP threshold for current adults and their ability to make ends meet is much stronger for countries with higher relative poverty levels, than for countries with low relative poverty levels. The share of people having difficulties to make ends meet in each Member State is an important factor to be taken into account in analysing the transmission of poverty through generations.

Figure 12 and Figure 13 show for the EU-28 the ability to make ends meet of current adults depending on the ability of making ends meet of their parents, split by gender and age groups.

The transmission of a low ability to make ends meet from parents to their children (current adults) significantly exceeds the transmission of a high ability to make ends meet from parents to their children, at 68.9 % and 55.9 % respectively. Gender differences are small in both groups; in turn there is a slight difference in the transmission of a low ability to make ends meet between the age groups of current adults. Younger cohorts have a slightly higher transmission rate of a low ability to make ends meet. However, it should be taken into account, that the younger cohorts include young people undergoing their studies or their first job experience and do not fully cover the transmission of intergenerational characteristics.

The information at the EU level gives an average assessment of the transmission of the ability to make ends meet. The results for all Member States show that there are significant links between having a low or high ability to make ends meet in childhood and the current ability to make ends meet. However, the impact of having a low or high ability to make ends meet in the past on the current situation is country specific (Figure 14 and Figure 15).

Figure 14 and Figure 15 show that there is a tendency to have more difficulties to make ends meet now for those who had low ability to make ends meet in their childhood in all countries. Table 1 shows the values of the association indices[6] for a current low ability to make ends meet for each Member State, gender and age group. The higher the association index, the stronger is the impact of a low ability to make ends meet in childhood on the current situation.

The impact of having a low or high ability to make ends meet varies between genders. In the EU-28 on average the association index for a current low ability to make ends meet is 2.8, for males it is 3.0, while for females it is 2.6. In the EU-28, the impact of an ability to make ends meet in childhood on the current situation is less significant for women than for men. The largest differences are registered in Sweden, the Netherlands and Malta, implying that in these countries the ability to make ends meet now is less impacted by an ability to make ends meet in childhood for females than for males. However, in Norway, Latvia, Slovenia, Estonia, and Germany the situation is the opposite, as the impact of an ability to make ends meet in childhood is less significant for men than for females.

Moreover, there are significant differences in the association index for a current low ability to make ends meet among age groups of current adults for several countries, in general showing that the association index for a current low ability to make ends meet is higher for younger age groups. This could be explained by the fact that in these countries the younger current adults have not yet accumulated their full potential to make ends meet or that the pattern as regards the transmission of an ability to make ends meet changes through different age cohorts. The largest differences between younger and older age groups are recorded in Italy, Hungary and Malta.

Economic situation

The economic situation in this article is defined as whether an adult is “at work” or is “not at work”[7]. The aim of this analysis is to focus solely on intergenerational transmission aspects of economic activity, even though the economic activity of adults is subject to various complex socio-economic phenomena which cannot be covered only by intergenerational transmission. In addition, the year of reference for this analysis is 2011, when the ad hoc module on intergenerational disadvantages was carried out. As the financial and economic crisis started in 2008, it had consequently a long lasting impact on employment rates in the course of 2011. Due to this, the results have to be analysed with caution as regards the economic activity situation of current adults.

There are substantial differences among the countries in the economic situation of the parents of current adults (see Figure 16). In Malta and Spain, more than 70 % of current adults had at least one parent not at work when they were children. On the contrary, in Finland, Slovakia, Lithuania, Latvia, Bulgaria, Czech Republic and Estonia, less than 20 % of current adults had at least one parent not at work in their childhood.

The persistence of the economic situation “not at work” between generations is shown in Figure 17 together with the percentage of those adults currently “not at work” who had both parents “at work” in childhood. In EU-28 on average 28.6 % of current adults are not at work among those having at least one parent not at work in childhood, while on the other hand 21.1 % of current adults are not at work among those having both parents at work in childhood. This varies significantly between countries. Generally, for all countries except Iceland, there is a greater tendency to have the economic status “not at work” for those adults who had one of their parents “not at work” in their childhood.

For example, for Cyprus the difference is minor: for those adults who had both parents at work in their childhood, 19.7 % had the economic status “not at work”, while for those adults who had at least one parent “not at work” in their childhood, 21.6 % had the economic situation not at work. On the contrary, in Slovakia, the difference is the most significant: 39.3  % of adults having at least one parent not at work in childhood are currently not at work, while only 20.5 % of adults having both parents at work are currently “not at work”.

Putting the above information together, it is important to note, that there is no systematic relationship between the persistence of economic situation through generations and the split of the parents' economic situation among the countries. Figure 18 shows the relationship between the proportion of adults with at least one parent "not at work" and the association index for being "not at work"[8]. Larger values of the association index for being “not at work” indicate a stronger relationship between the economic situation of the current adult “not at work” and the economic situation of his parents when at least one of them was “not at work” than for lower values of the association index. There are country specific relationships that could be influenced by cultural and socioeconomic factors. For example in Spain, where on average 74.5 % of current adults had at least one parent not at work in childhood, the association index for being "not at work" is only 1.1. In the other hand in Sweden, where only 21.3 % of adults had one parent not at work, the association index for being "not at work" is 1.6.

Data sources and availability

EU-SILC 2011 cross sectional variables, including the ad-hoc module on Intergenerational transmission of disadvantages, are used in the analysis. EU-SILC is an instrument aiming at collecting timely and comparable cross-sectional and longitudinal multidimensional microdata on income, poverty, social exclusion and living conditions. This instrument is anchored in the European statistical system.

In this context, the persistence of characteristics from parents is measured for the group of the population currently aged 25-59. For their part, the characteristics in childhood of current adults refer to the period when they were 14 years old. Through this article this period will be defined as "childhood".

In the presentation of the distributions and analysis, survey results which are uncertain in terms of the ability of current adults to remember their childhood for certain questions are not taken into account.

Data in this document were extracted from a special module on ‘Intergenerational transmission of disadvantages’ of the EU statistics on income and living conditions (EU-SILC) survey, which was carried out in 2011. All data are available as Excel files downloadable from the Eurostat website.

Odds ratio

Odds are expressed as the probability of an event occurring divided by the probability of the event not occurring. The odds ratio is a tool to show how strongly having or not having a certain property in the population is related to having or not having another property in that population. In the example below, the odds for a low ability to make ends meet for current adults having a low ability to make ends meet in their childhood would be A/(A-1), and the odds for a low ability to make ends meet for current adults having a high ability to make ends meet in their childhood would be B/(1-B). The odds ratio for a low ability to make ends meet for current adults depending on their situation in childhood would be:



F1.png


. Low ability to make ends meet for current adults, share High ability to make ends meet for current adults, share
Low ability to make ends meet in childhood A 1 - A
High ability to make ends meet in childhood B 1 - B


The above odds ratio is calculated below for the EU-28 population, total (age group 25-59) (presented in Table 1).


F3.png

. Low ability to make ends meet for current adults, share High ability to make ends meet for current adults, share
Low ability to make ends meet in childhood 0.69 1 - 0.69
High ability to make ends meet in childhood 0.44 1 - 0.44


Context

The objective of the 2011 module on ‘Intergenerational transmission of disadvantages’ is to analyse the evolution of the results on this topic and in continuation of the former (2005) ad-hoc module on the ‘intergenerational transmission of poverty’. The extent to which inequalities persist across generations is considered to play a major role in explaining adult social exclusion. In particular, the parental educational background and or their socio-economic status could influence the poverty risk during adulthood.

See also

Further Eurostat information

Publications

Database

2011 module: Intergenerational transmission of disadvantages
Income and living conditions (ilc)
EU-SILC ad-hoc modules (ilc_ahm)

Dedicated section

Source data for tables and figures (MS Excel)

Other information

  • Regulation 481/2010 of 1 June 2010 concerning Community statistics on income and living conditions (EU-SILC)

Notes

  1. In the SILC survey the level of education of the person (educational attainment - meaning highest level of education successfully completed) is coded according to the ISCED (International Standard Classification of Education). For the purposes of this article, the education attainment categories were regrouped as following: the low education level is defined as at most lower secondary education; medium level as upper secondary education and post-secondary non-tertiary education, and high level as tertiary education (first or second stage).
  2. The association index is calculated as an odds ratio and measures how strongly the level of education of adults is related to being under AROP threshold. The higher the association index for being at risk of poverty the stronger is the relationship between low education level and being at risk of powerty. The calculation of odds ratios is explained in the Data sources and availability section.
  3. The at-risk-of-poverty (AROP) rate is the share of people with an equivalised disposable income (after social transfers) below the at-risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income after social transfers. This indicator measures low income in comparison to other residents in that country.
  4. The association index is calculated as an odds ratio and measures how strongly the low level of education of adults is related to the low level of education of parents compared to the high level of education of parents. The calculation of odds ratios is explained in the Data sources and availability section.
  5. Low ability to make ends meet is a joint variable of three possible negative answers in the SILC survey : with great difficulty, with difficulty and with some difficulty; High ability to make ends meet is a joint variable of three possible positive answers in the SILC survey: fairly easy, easy, and very easy. Unknown results were not taken into account.
  6. Association index is calculated as an odds ratio and measures how strongly a low ability to make ends meet for current adults is related to a low ability to make ends meet in their childhood as compared with a high ability to make ends meet in their childhood. The calculation of odds ratios is explained in the Data sources and availability section.
  7. For the EU-SILC 2011 ad-hoc module on Intergenerational transmission of disadvantages: Persons “At work” are defined as persons being employed or self-employed; “Not at work” includes unemployed, in retirement or in early retirement or had given up business, fulfilling domestic tasks and care responsibilities, other inactive person, don’t know. For EU-SILC 2011 cross sectional data: “At work” includes employee working full-time, employee working part time, self-employed working full-time, self-employed working part-time; “Not at work” includes unemployed, pupil, student, further training, unpaid work experience, in retirement or in early retirement or had given up business, permanently disabled or/and unfit to work, in compulsory military community or service, fulfilling domestic tasks and care responsibilities, other inactive person.
  8. Association index is calculated as an odds ratio and measures how strongly the economic situation “not at work” of the current adults is related to the economic situation of their parents when at least one of them was “not at work” compared with the economic situation of their parents when both were “at work”.


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