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Social Cohesion and Social Capit

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Social Cohesion and Social Capit Powered By Docstoc
					Social Cohesion and Social Policy:
 Does income inequality matter?

             Sarah Carpentier
                  Ive Marx
            Karel Van den Bosch

   Centre for Social Policy Herman Deleeck
            Brussels, May 15th 2008
Outline
1. Social cohesion in policy: definitions,
   indicators
2. Does income inequality matter ?
3. The production of equality, or the puzzle of
   egalitarianism
4. Conclusion
1. Social cohesion in policy:
   definitions and indicators
Social cohesion as a goal of
social policy
By several policy actors
• Local (e.g. UK)
• Regional (e.g. Walloon region)
• National (e.g. Canada)
• Supranational (e.g. EU, OECD, Council of
  Europe)
Council of Europe (2005)
• Definition
   = a society‟s ability to secure the long-term well-being of al its
     members
  Four central principles
   –   Fair and equal access to ressources
   –   Individual and collective dignity
   –   Autonomy of the individual
   –   Participation in community life

   Social, economic, cultural, political cohesion & sustainability
Council of Europe (2005)
• Indicators
  four levels of analysis (from general to specific)
   – Main indicators: social cohesion trend
   – Indicators of public actions which are constituents
     of well-being (shared responsibility)
   – Specific life domains (employment, income, housing)
   – Sensitive situations & vulnerable groups
   => Beyond inequality and poverty measures, but
       remain key indicators
OECD (2006)
• Definition
  –   No definition
  –   Pathologies inform about a lack of cohesion
  –   Central concept: social development
  –   Fostering social cohesion: a policy goal
      besides of enhancing self-sufficiency, equity & health

  Economic and social well-being
  (and sustainability)
OECD (2006)
• Indicators
  – Aim: capturing changes in outcomes that social
    policies try to influence with limited ressources
  – 3 types of indicators
     • Social context
     • Social status (outcomes)
     • Societal response
OECD (2006)
• Indicators
   – Social cohesion indicators:
     social status
      •   Overall well-being (life satisfaction)
      •   Societal dysfunctions (suicide, work accidents)
      •   Social conflict (strikes)
      •   Political parcipation (voting) and trust
     societal response
      • Number of prisoners
   – Main social development indicators: employment and
     unemployment, inequality, poverty and deprivation
EU
• No explicit definition
• 2 main conceptualisations,
  rooted in historically developed policies
  – EU regional cohesion policy
  – EU social cohesion pillar of the Lisbonstrategy
EU Regional Social Cohesion Policy

• Definition
   – Economic, social and territorial cohesion:
     reducing economic and social disparities between regions to
     create an economic space attractive to invest and to work in
   – Social cohesion
      • poorly stressed
      • Seen as integration in the labour market


      Economic and territorial cohesion
      (and sustainability)
EU Regional Social Cohesion Policy

• Indicators: GDP
• Policy: Structural Funds and Cohesion Fund
  second largest budget item EU
  2007-2013: 350 billion euro
     (+ 150 billion euro of public/private
     national means)
Lisbon strategy –social cohesion

• Lisbon strategy (2000):
  To become the most competitive and dynamic
  knowledge-based economy in 2010 with
   – A strong economic growth
   – More and better jobs
   – Greater social cohesion
   – Sustainability (2001, Göteborg)
     economic and social cohesion (and
     sustainability)
Lisbon strategy –social cohesion

• No explicit definition of social cohesion
  Social cohesion = European social model
  – No clear concept, assumes (Jepsen & Serrano Pascual):
     - Dichotomy with US
     - Integration of economy and social policy
  - Covers solidarity embodied by (Jeanotte)
     - Universal social protection system
     - Regulation for market correction
     - Social dialogue
  OMC: social protection and social exclusion prevail
Lisbon strategy –social cohesion

• Indicators
   – Outcome indicators (in line with subsidiarity principle)
     (also social spending and context indicators are asked)
   – 3 level structure:
      • 1st level: key indicators           Commonly agreed
      • 2nd level: in-depth indicators
      • 3rd level: Nation-specific indicators
   – Consists of
      • Indicators on inequality and (relative) poverty: very prominent!
      • Indicators about life domains (employment, health, education, housing)
      • Breakdowns for vulnerable groups
Lisbon strategy –social cohesion

• Policy:
  – Reports (in line with subsidiarity)
     • Member states: National Strategic Reports on Social
       Protection and Social Inclusion
     • EU: Joint Report Social Protection & Social Inclusion
       http://ec.europa.eu/employment_social/spsi/
       the_process_en.htm
  – Aims at coordination through agenda-setting and
    mutual learning
Concluding
- Social cohesion has multiple meanings in policy use
- Differences in breadth of dimensions included
- Hence, also multiple ways of measuring
- Although, generally acknowledged as multi-dimensional
  phenomenon, reduction of inequality and poverty presents
  consensus dimension (= seen as threats) (cf. Jeanotte)
- Indicators about poverty and income inequality (and to a
  lesser extent labour market participation and
  unemployment) are prominently used
2. Does income inequality matter?
2. Does income inequality matter?
• Evidently, policy makers say „yes‟, but why?
• Income inequality is multi-faceted phenomenon:
  – Result (indicator) of inequities (exclusions)
  – Result of factors without normative bearing
  – Cause of bad things (see below)
• Current income is:
  – only (important) part of
  – yet good indicator
• of wider inequality in economic resources
2. Does income inequality matter?
• Income                 30
                                                                                       Mexico

 inequality                                                   US

 does not
                                                Ireland                 Turkey
                                                         Portugal
                                                        Greece
                                               Australia Italy

 necessarily             20                         UK
                                                  Spain
                                              Canada
                                       Austria       Poland
 imply                                   Germany
                                           Hungary
                                      Finland
                                        Belgium
                                        France
                                   Luxembourg

 relative                             Norw
                                      Netherl
                                  Denmark ay
                                    Sw eden
                                     Czech R

 poverty,
                         10
               POV_OEC




 but the two
 are in fact             0
                              2            4              6         8            10   12        14
 closely
                              S80_S20
 related.
2. Does income inequality matter?
• Effects of income inequality on other life-
  domains area of intense research and debate.
• On the one hand, Burtless and Jencks (2003):
  “the effects of inequality on economic growth,
  health, and equality of opportunity are modest
  and uncertain in rich countries”
2. Does income inequality matter?
•   On the other hand, Wilkinson (2007):
    “many problems associated with relative
    deprivation are more prevalent in more
    unequal societies … this may be true of
    morbidity and mortality, obesity, teenage birth
    rates, mental illness, homicide, low trust, low
    social capital, hostility and racism”
•   Some illustrations of this follow:
2. Does income inequality matter?
•   Income inequality and rate of mental illness:
    2. Does income inequality matter?
•     Income inequality and educational achievement:
    2. Does income inequality matter?
•     Income inequality and imprisonment:
    2. Does income inequality matter?
•     However,
•     Causal mechanisms remain obscure
     –   Wilkinson: low position breeds stress
•     Relationships disappear (or are reversed) in
      „panel-of-countries‟ approach, i.e. no link
      between changes in income inequality and bad
      outcomes.
3.   The production of equality,
                 or,
     The Puzzle of Egalitarianism
    3. The Puzzle of Egalitarianism

•  How can public policy promote greater equality
   (less inequality, less relative poverty)?
• Three broad strategies:
  1. Income redistribution through social insurance
      or social assistance
  2. Providing goods & services free or at reduced
      cost (health care, education, housing)
  3. Investing in market-income generating abilities
      of individuals, esp. children
    3. The Puzzle of Egalitarianism
•     Despite the „Active Welfare State‟ etc. most
      resources go to the 1st (and 2nd strategy).
•     Also, doubts about the effectiveness of the
      Activation Strategy
•     The question is then:
      Does income redistribution reduce inequality?
•     Looking at simple cross-country correlations, the
      question is yes.
    3. The Puzzle of Egalitarianism
•    high social expenditure implies a low rate of relative
     poverty.
                                                       18

                                                                USA
       working-age poverty rate (% working-age pop.)




                                                       16

                                                                      Italy
                                                       14


                                                       12             Canada
                                                                                       UK

                                                       10                                   Germany
                                                                           Australia

                                                        8
                                                                                       France              Netherlands       Sweden
                                                                           Austria
                                                        6                                   Belgium
                                                                                                                         Finland

                                                        4
                                                            0          5                     10                   15                  20
                                                                                social expenditure (% of GNP)
    3. The Puzzle of Egalitarianism
•     But: problem of counterfactual: what would have
      been the level of inequality in the absence of
      social expenditure?
     –   Not necessarily the same across countries
     –   Counterfactual problem has basically no solution
•     Suggestive evidence: Inequality in wages is
      negatively related to social expenditure
3. The Puzzle of Egalitarianism
 –                                fewer low paid workers, more social expenditure

                                  20
                                           Sweden

                                             Finland
     social expenditure (% GNP)




                                  15                      Netherlands


                                                Belgium            Germany
                                  10
                                                                                        UK
                                                                   France
                                                            Austria      Australia
                                                                                                 Canada
                                                                       Switzerland
                                  5                            Italy
                                                                                                     USA



                                  0
                                       0                  10                            20                 30
                                                       low pay incidence (% full-time workers)
    3. The Puzzle of Egalitarianism
•     Possible reasons for this relationship:
     – second-order effects of high benefits and high
        taxes and contributions.
     – high wage dispersion, large market inequalities
        make redistribution difficult
       • (social insurance for the self-employed in Belgium)
     – high level of solidariy (social cohesion?),
       embedded in institutions, produces low wage
       dispersion and enables high level of income
       redistribution.
    3. The Puzzle of Egalitarianism
•     In supranational social cohesion policies:
      Inequality (and poverty) are common dimensions
      in defintion and indicators
•     Effect of income inequality on other life domains
      is area of intense research and debate
•     Suggestive evidence that income redistribution
      reduces inequality
    4. Conclusion
•     Inequality (and poverty) constitute a consensus
      dimension in definitions and indicators used by
      social policy actors
•     Effect of income inequality on other life-domains
      is area of intense research and debate
•     Suggestive evidence that income redistribution
      reduce inequality

				
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