Children on benefit: who stays longest?

• Author: Barrett, Garry

Abstract

This paper reports on the analysis of administrative benefit data for the cohort of approximately 30,000 children born in 1994 who had contact with the benefit system before age three. We follow each child for between four and eight years and examine the length of their first spell with an adult caregiver receiving an income-tested benefit. The explanatory variables used in the analysis include characteristics of the child and their caregiver(s), as well as the regional unemployment rate and several variables used as proxies for key policy changes. Proportional hazard models, which allow for time variation in the variables as well as censoring, are estimated to gauge the independent association between each observed characteristic and the probability of the child leaving benefit. Median durations for selected combinations of characteristics are calculated, using the estimated proportional hazard models and the empirical survival functions. Departure from benefit marks the end of a benefit spell. This analysis does not go on to examine the quality of the outcome that resulted.

INTRODUCTION

Analysis of longitudinal benefit administration data for New Zealand has shown that by the time children born in 1993 turned seven, half had been supported by one of New Zealand's main social assistance benefits at least once. While this was a transitory experience for many, approximately one in five children in the 1993 birth cohort spent at least five of their first seven years of life supported by a main benefit (Ball and Wilson 2002).

Bivariate analysis of factors associated with long benefit durations highlights having first contact with the benefit system at birth; living with a sole caregiver at first contact; and first appearing with a primary' beneficiary who was female, Maori or aged under 20 (Ball and Wilson 2002). But these factors are interrelated. Further, the significance of some may reflect the influence of factors not captured by the benefit data, such as the educational attainment and employment history of the caregivers.

The objective of the more detailed analysis reported here is to estimate independent associations between observed characteristics and benefit durations. We also include new measures of educational attainment and employment history of caregivers in the analysis.

The need to better understand childhood income experiences is not trivial. Recent research highlights links between income relative to needs and access to items basic to child well-being (Krishnan et al. 2002). Early findings from the New Zealand Census-Mortality Study show that children in households with low equivalised income at the 1991 Census had higher than average mortality rates over the ensuing three years (Blakely 2002). Studies carried out in New Zealand and overseas consistently find that low family income matters not only for well-being in childhood, but also for outcomes in later life, although the extent to which this relationship is causal is the subject of some debate (Mayer 2002). While benefit data do not tell us about all of children's experience of low income, they can provide an indicative view. (2)

The report is organised as follows. First, we describe the theoretical model underpinning the organisation of the analysis. We then detail the data used, including a discussion of the advantages and limitations of the data for our analysis. The statistical methodology is outlined and then the results are summarised. We conclude by summarising some of the interesting results and point to areas for future research.

More detailed information on all the areas covered by this article can be found in Barrett et al. (2002a).

THEORETICAL MODELS

When thinking about the duration of children's spells on benefit programmes it is not appropriate to apply behavioural causal models, since it is adults, not children, that make the relevant behavioural choices (Jenkins and Rigg 2001:75). The approach we take is to develop descriptive rather than causal models, but use models of adult behaviour to help structure the analysis and select potentially important explanatory variables.

The basic principle underlying the analysis of the duration of adult spells on benefit is that at any point in time an individual either continues to participate or exits a programme, depending on the choices they make, subject to constraints. Where the person is unemployed, models of job search and acceptance are relevant. Where the person is a sole parent, models of partnering as well as models of job search are relevant. Where the person is incapacitated, medical models of time to recovery or mortality might be relevant, as well as job search models that incorporate the implications of current or past incapacity for wage offers and the costs of working.

From the point of view of the child, a range of events might end a spell on benefit. These include the employment of a sole caregiver or one or both partnered caregivers, the partnering of the child's sole caregiver to an employed partner, the recovery or occupational rehabilitation of an incapacitated caregiver, or the movement of the child to another caregiver who is employed.

THE BENEFIT DYNAMICS DATA

The data source used in the analysis is the benefit dynamics data set, a longitudinal data set built from benefit administration data. (3)

The data set has some particular strengths as the basis for an analysis of children's income experiences. It includes the entire population of people who received a first-tier income-tested benefit (4) over the period covered (January 1993 to December 2001) and holds unique identifiers for all individuals in that population, including the children. These features let us analyse all children having contact with the benefit system, including narrowly defined subgroups of children, without encountering the problems associated with sampling error. We are also able to analyse the durations of those children who might have a low probability of being included or retained in a longitudinal survey, such as those moving between caregivers (Bradbury et al. 2001:47-48).

In addition, the data set gives a continuous account of changes in status. It accurately dates the start and finish dates of spells on benefit. These features, together with our ability to comprehensively keep track of children, enable accurate calculation of total benefit durations over what can be complex benefit and caregiver histories.

Against these strengths there are some limitations. The quality of the data is highly dependent on the administrative processes that generate them. The administrative origin of the data set also limits its scope. It gives only a partial view of the lives of children and families, confined to those aspects that are important to the administration of benefits.

THE ANALYSIS DATA

The benefit dynamics data set currently provides longitudinal data over a nine-year window from 1 January' 1993 to 31 December 2001. Figure 1 illustrates the manner in which the present analysis utilises this window.

We focus on children born within the window of the base data to better understand whole of childhood low-income experiences. The 1994 rather than 1993 birth cohort is used in order to gain a one-year history of the caregiver's benefit use prior to the child's first contact.

The study population is children born in 1994 who had some contact with the benefit system by age three, or approximately 28,600 children. We estimate that these children make up close to half the total number of children born in New Zealand in 1994, and more than 80% of the children in that birth cohort who would have contact with the benefit system by age seven (Ball and Wilson 2002). Restricting the study to those with contact by age three allows us to gain a minimum four-year follow-up from the date of first contact. The maximum follow-up is eight years.

The Dependent Variable

The focus of our interest is the length of the first-ever spell on benefit for children in our cohort (that is, those born in 1994 who had some contact with benefit by age three).

A large proportion of children who complete a spell on one benefit or with one caregiver either transfer directly to another benefit or caregiver the same or next day, or return to benefit after only a short period. These short absences make it sensible to define a spell on benefit as the period up to an exit that is sustained for some minimum period. We define this minimum period to be 12 weeks, based on analysis of the rates of return to benefit across different lengths of time. (5) No attempt is made in this paper to examine the quality of the outcome that results from cessation of benefit.

With this 12-week definition, the first-ever spell accounts for:

* 80% of the total weeks spent on benefit by the study children in the 3.75-7.75 year follow-up; (6) and

* the total experience of 58% of the study children in the follow-up--this being the proportion with only a single spell in that period in terms of the 12-week definition.

Observed Characteristics

The variables we include capture differences between children in their family composition, and in the demographic and other characteristics of their caregivers. Our methods allow for time variation in those characteristics that potentially vary over time. (7) This is important, because we allow characteristics such as family structure and the caregiver's participation in paid employment to vary as the spell progresses. We also include variables that capture key changes in policy settings that occurred over the period, and changes in unemployment rates in the region (or regions) in which the child lives. Partner's characteristics are included for that portion of the population (approximately 40%) with partnered caregivers.

Family composition is measured using the following variables:

* the partnership status and sex of the primary beneficiary;

* whether there were any other children in the family in...