Parents and employment
A hard copy of this report summary can be obtained by contacting Paul Noakes [E-Mail: Paul.Noakes@dwp.gsi.gov.uk] or by writing to him at the 'Social Research Division, Department for Work and Pensions, 4th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT'.
Research Report No. 107
By Maria Iacovou and Richard Berthoud
This report presents findings from research that was commissioned by the Department of Social Security to provide a picture of the changing situation of families who might come within range of the new Working Families Tax Credit. It is based on an analysis of seven waves of the British Household Panel Survey, which has interviewed the same adults every year since 1991. The analysis focuses on non-working families with children, examining their rate of movement into work; the interactions between family transitions and labour market transitions; and the incomes of those families who move into work.
The main findings were
- Only a quarter of non-working couples with children were in work a year later; and just one tenth of non-working lone parents (though others may have worked for a brief period during the intervening months).
- But those who do move into work have a high chance of staying there.
- The prospects are best for those couples where both the mother and the father are able to look for a job.
- Taking a part-time job, even for a few hours a week, can improve people's future chances of moving up the income ladder.
A 'family' perspective on employment
The chances of a father moving into work in the course of a year are influenced mainly by classical economic factors such as his qualifications, his health and the availability of jobs in the area. But mothers' job prospects are more closely associated with family characteristics such as the age of her children and her 'readiness' to start working again. This is true of both mothers in couples and lone parents.
Although those who find work are usually better off than they had been on benefit, it often requires “two” jobs to lift a family clear of the low-income zone. Moving from no job to two jobs is uncommon. Nevertheless, both men and women are twice as likely to find work in the course of a year if their partner also does so:
- men and women in workless couples are more likely to move into jobs if their partner also moves into work;
- non-working lone parents who find a working partner are much more likely to get a job themselves than those who remain a lone parent or who start a relationship with a jobless partner
'Mini-jobs'
A proportion of mothers or fathers in 'non-working' families have a part-time job working fewer than 16 hours per week. (This is the limit below which people can continue to claim Income Support.) The more hours they do in 'mini-jobs' like this, the more likely they are to be able to get a job working more than 16 hours the following year. A mini-job appeared to provide more of a boost to prospects than going on a training course.
Introduction
This research analyses low-income families' rates of movement into work, the interactions between family transitions and labour market transitions and the incomes of those who move into work. Separate analyses were undertaken of the experiences of couple families and lone parent families. This research used data from the first seven waves of the British Household Panel Survey (BHPS) from 1991-1997. The first (wave 1) interviews were undertaken in 1991 and all the respondents were re-interviewed annually so that individuals' lives could be followed from year to year.
The aim of this research was to provide a detailed plot of families' patterns of movement during the years when Family Credit was available rather than to assess the impact of either Family Credit or the new Working Families Tax Credit. The report focuses on the transitions made by non-working families with children.
Origins and destinations
The majority of non-working couples with children (61 per cent) arrived in this situation when one or both partners lost their job. Similarly, 71 per cent of those who left this situation did so by one or both partners finding work.
Relationship breakdown was more important than job loss as a route of entry into non-working lone-parenthood (46 per cent against 27 per cent). However, as many non-working lone parents left this situation by finding a job (43 per cent) as by finding a partner (40 per cent).
Who moved into work?
There were important differences between men in couples, women in couples, and lone mothers, in terms of the characteristics which effectively predicted their movements into work. For men in couples, nearly all the significant predictors of movements into work were related to employability or to the local labour market. For women, on the other hand, family characteristics (crucially, the age of the youngest child), and readiness for work, played an important part: this was true for both women in couples and for lone mothers.
Educational qualifications were important as a predictor of finding work for men and women in couples (those in the highest educational group were over twice as likely to move into work as those with no qualifications), but not for lone mothers.
A limiting health problem was associated with a reduced probability of finding work for men and women in couples, but there was no significant association for lone mothers.
For men in couples and for lone parents, those who had spent longer periods of time out of work were significantly less likely to move into work. For women in couples there was no significant relationship.
Being 'ready to work', as defined by looking for a job, saying one would like a job, or having undergone recent training, was significantly associated with movements into work for both groups of women, but not for men.
For “all” groups, those working in 'mini-jobs' of less than 16 hours a week were more likely to move into a job with more hours. The more hours worked, the stronger the effect.
Men living in areas of high unemployment were less likely to find work than other men. There was no significant relationship for women.
The age of the youngest child was an important predictor of movements into work for both women in couples and lone mothers. The probability of a woman finding work increased by 20 per cent for each year of age of her youngest child.
Mothers with babies under one year old were more likely to find jobs the following year than might have been expected given the otherwise linear relationship with children's ages.
Lone mothers receiving maintenance payments were more likely to move into work.
Families' movements into work
Both men and women in workless couples with children were much more likely to move into work if their partner also moved into work, and less likely to move into work if they split up from their partner. Both men and women whose partners found work the following year were around three times more likely to find work themselves. In contrast men and women in dual-earner couples were not noticeably more likely to stop working if their partner also stopped working.
Men with more highly-educated partners were more likely to move into work, and women with disabled partners were less likely to move into work
The analysis also showed that workless lone mothers who found a partner with a job were over seven times more likely to have found a job themselves in the same year than those who remained lone parents.
Family transitions and labour market transitions
Family and employment transitions were found to be closely linked. Controlling for other characteristics:
Non-working couples were more likely to split up if:
- they were cohabiting rather than formally married;
- they lived in an area of low unemployment;
- the woman was more highly-educated than the man;
- the woman had never had a job;
- they had three or more children.
Non-working lone parents were more likely to find a partner if:
- they were younger;
- they had a job for a few hours each week;
- they had previously been married;
- they were receiving maintenance payments.
Incomes of families who move into work
Comparing the incomes of families who moved into and out of work, with the incomes of families who were in work all the time:
- Families who had moved into work in the past year had much lower (equivalent) incomes than those who had been in work for two years or more.
- The incomes of families who left employment were very similar to the incomes of those who started employment, and again much lower than the incomes of those who stayed in employment.
- The lower a family's in-work income, the more likely it was to move out of work. A clear rotation was found between 'low pay' and 'no pay'.
Most families moving into work experienced an increase in income as a result:
- The average gain for a couple with children moving into work was £69 per week and £46 per week for a lone parent.
- Not all families were made better off by moving into work. Almost one in five couples, and one in four lone parents, experienced a “fall” in income when they started work.
- Most families remained within the low-income bracket. But two jobs were much better than one at raising a non-working family out of the low-income category.
Medium-term dynamics
In any one year, 27 per cent of workless couples with children, and 10 per cent of workless lone parents, moved into work (looking only at families who did not change their family status). Of the families who had not found work after one year, there was continuing movement into work in later years, but the rate of movement into work declined over time. Rates of return to work were much higher among families who had started a spell of unemployment “recently.”
The research looked at how long jobs lasted among families who had recently moved into work after a period out of work:
- Of couples with children who had moved into work in the past year, 18 per cent had already stopped working by the following year, but almost 60 per cent remained in work continuously for the next five years.
- The drop-out rate among lone parents was higher: of lone parents who had moved into work in the past year, a quarter stopped working again by the following year, and almost a half had stopped working at some point in the next five years.
Comparing the characteristics predicting movements into 'stable' work (i.e. being in work for two years in a row) with those predicting movements into work in general:
- For men and women in couples, educational qualifications were even more important as predictors of 'stable' employment than as predictors of shorter-term prospects.
- The husband's disability damaged the prospects of moving into 'stable' employment more than it damaged the prospects of shorter-term work.
- For lone mothers, looking for work and receiving training had more of an impact on moves into 'stable' employment than moves into shorter-term work.
Conclusions
The researchers discuss two types of policy consideration in the light of their findings.
A family perspective: While it has usually been assumed that policy should aim at encouraging one parent, usually the father, into work, the research suggests that more attention should be given to mothers' prospects:
- because if the mother finds a job, the father is relatively likely to do so too;
- because a second job is often essential to raise the family clear of low income.
So the provision of childcare may be critical, not just to lone parents' prospects of finding work, but also to the chance of workless couples finding their way out of poverty.
An alternative perspective is to recognise that there are periods in a family's life when a mother cannot leave her children. The ideal strategy might be to support one-earner families when that is the main option, but to encourage two-earner families where that is a possibility.
Mini-jobs: Those who work a few hours per week while on Income Support or JSA have a high chance of obtaining a more substantial job. It might be argued that small part-time jobs should be encouraged rather than discouraged among benefit claimants. At present they are affected by the limits on the earnings that can be received without affecting benefit entitlement. Indeed, while the research is not conclusive, encouraging people to take 'mini-jobs' might be more effective than requiring them to attend training courses or work placement programmes.
Relevant publications
Berthoud, R. (1984) “The Reform of Supplementary Benefit”, Policy Studies Institute
Department of Social Security (1999)“ Households Below Average Income: a” statistical analysis 1979-1996/97, London:TSO
Dilnot, A. and Kell, M. “Male Unemployment and Women's Work”, Fiscal Studies Volume 8 no. 3, pp 1 - 16
Ford, R., Marsh, A. and Finlayson, L. (1998) “What Happens to lone parents?”
Department of Social Security Research Report No.77, London:TSO
Marsh, A. and McKay S. (1993) “Families, Work and Benefits”, Policy Studies Institute
Middleton, S., Ashworth, K., and Walker, R (1994)“. Family Fortunes: ” pressures on parents and children in the 1990s, CPAG