Poverty gap analysis to explore the depth of poverty experienced by children of low-income families in the UK.
Working Paper No. 103
By Karen Gardiner and Martin Evans
The purpose of this paper is to use poverty gap analysis to explore the depth of poverty experienced by children of low-income families in the UK.
Measures set out in the Child Poverty Act and in the National Child Poverty Strategy are based on poverty headcounts, i.e. you are either below or above a certain poverty threshold. The most commonly used measure is the 60 per cent relative poverty measure, defined as individuals living in households with incomes below 60 per cent of the median income. The head count does not distinguish between those with incomes just below the poverty line and those deeper in poverty. Policies which improve incomes for those at the bottom of the income distribution will not lead to a fall in measured income poverty, unless incomes are raised sufficiently to cross the chosen poverty threshold, and yet reducing these families’ depth of poverty is highly likely to improve living standards.
This paper supplements the headcount measures with analysis of the ‘poverty gap’ for UK children. The poverty gap measures ‘How poor are the poor’, ie the extent of poverty for those who are below the relative poverty threshold. With this measure, an improvement in incomes for those in poverty which is not sufficient for them to escape poverty, is nevertheless captured as a drop in measured poverty.