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Economic Inequality: The life course perspective over economic shocks

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Esa Karonen: Economic Inequality: The life course perspective over economic shocks. Presentation at Turku Center for Welfare Research 2.12.2016.

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Economic Inequality: The life course perspective over economic shocks

  1. 1. Economic Inequality: The life course perspective over economic shocks Esa Karonen & Mikko Niemelä Tackling Inequalities in Time of Austerity
  2. 2. Aims of the PhD study Research topic Data 1 Income inequality between generations Income distribution statistics 1987-2014 Income and expenditure surveys 1966-1985 2 Wealth inequality between generations Households’ Wealth 1988-2013 3 Consumption inequality between generations Income and expenditure surveys 1966-2012 4 Benefit reforms and their effects on the income inequality between generations SISU-microsimulation data
  3. 3.  Life course perspective offers a great platform for researching intergenerational changes (Karl Ulrich Mayer)  Birth-cohorts as research units and objects of research  The effects of economic shocks as comparison point  Offers the periodic perspective and the association between incomes and birth-cohorts Literature review
  4. 4.  Adequate range of data (mainly income)  Adequate range of statistical years in data (short time series)  Age-period-cohorts –design A prior research lacks
  5. 5.  Research questions  How birth-cohort’s income trajectories differ from each other?  What are the effects of economic shocks over different birth- cohorts?  Economic shocks  1940 2nd World War  1973 oil crisis  1993 ”the great depression”  2007/8 financial crisis Research questions
  6. 6.  Two cross-sectional datasets  Income Distribution Statistics, 1987-2014  Income and expenditure survey, Consumption, 1966-1985 Data
  7. 7.  Dependent variables: Disposable household income (equivalent & inflation adjusted)  Independent variables: GDP, employment level, education, SES  Cohort design:  Birth-cohorts with 5 year intervals  ”Crisis cohorts” – two different generations  25-30 year olds at the time of economic shock  40-45 year olds at the time of economic shock  Used statistical models:  APC-model, D-variant (age-period-cohort “detrend” -variant)  Foster-Greer-Thorbecke poverty indexes Variables & models
  8. 8. APC –model in a nutshell
  9. 9. Some technical Greek moonrunes
  10. 10. Results 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 1966 1971 1976 1981 1985 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 FGT a=0, headcount index 0 0.02 0.04 0.06 0.08 0.1 0.12 1966 1971 1976 1981 1985 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 FGT a=1, normalized poverty index 0 0.005 0.01 0.015 0.02 0.025 0.03 0.035 0.04 0.045 0.05 1966 1971 1976 1981 1985 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 FGT a=2, squared poverty index WW2 - 25-30yrs - 1915-1920 Oil crisis - 25-30yrs - 1948-1953 90´s depression - 25-30yrs - 1965-1970 Financial crisis - 25-30yrs - 1985-1990 Oil crisis - 40-45yrs - 1933-1937 90's depression - 40-45yrs - 1950-1955 Financial crisis - 40-45yrs - 1967-1972
  11. 11.  Dependent variable: centered (period level) logarithmic disposable income  Control variables: Education, SES, size of household, unenployment  Used weight: (weight*n members in household) Results -0.2 -0.15 -0.1 -0.05 0 0.05 0.1 0.15 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 APC-D Cohort estimates, linear regression (hysteresis adjusted)
  12. 12.  International comparing points  Scale is same as in Norway  In the cases of Norway and France the APC-D estimates have similar shape as Finland Results
  13. 13. -0.6 -0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5 0.6 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 APC-D Cohort estimates, logistic model (hysteresis adjusted)  Dependent variable: middle income ”membership”  Disposable income in quitiles (1-2 = 0; 3-5 = 1)  No control variables included (saved processing time) Results
  14. 14.  Again, international comparing points  Scale is more aggressive than in Norway  Reason: upper- middle class  Norway has the same trajectory, although, younger cohorts have recovered Results
  15. 15.  Youngest cohort at the risk of income stagnation…or not?  Income developement peak at the cohorts born in 1930-40 and the middle income attainment at 1945-1950?  Financial crisis affects risk of poverty more heavily for those who are entering to the job market than older cohorts in more stable life cycle Conclusion
  16. 16. THANK YOU!
  17. 17. Consortium partners of TITA project

Esa Karonen: Economic Inequality: The life course perspective over economic shocks. Presentation at Turku Center for Welfare Research 2.12.2016.

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