This paper is one of two briefings that make use of early data from Round 3 of the Young Lives survey in 2009 to explore the extent and effects of economic and environmental shocks and adverse events on Young Lives and children and their households.
The paper begins by considering the recent global context, demonstrating a period of economic growth in Young Lives survey countries before the economic downturn in 2008. We then consider the extent of economic and environmental shocks and family illness or death reported by Young Lives families in two periods (2002–6 and 2006–9). The first of these periods (2002–6) coincides with relatively strong GDP growth in many countries (including in Young Lives countries) before the economic downturn and global food price crisis. Even in the context of strong national economic growth, however, many Young Lives households were reporting experiencing frequent shocks which had the potential to damage their well-being.
Different countries are being affected differently by the economic downturn, with more open economies more likely to be quickly affected by changes in international demand. Similarly, the impacts of global shocks may be experienced differently by different social groups within countries. The Young Lives samples are not nationally representative, as the focus is on poor children, but by logging what happened to households we can detect how change over time is affecting children and what similar (or different) processes are going on in each of the Young Lives countries, as well as noting disparities within the samples.
Comparing 2006–9 to 2002–6, more Young Lives households reported experiencing economic shocks in Ethiopia, Vietnam and in Andhra Pradesh in the later period. Fewer Young Lives households in Peru reported economic shocks in the 2006–9 periods than in the 2002–6 period. An examination of what caused these economic shocks suggests they were driven by changes in market prices. The picture that emerges here is one of a concentration of adverse events affecting particular households, and a cyclical pattern of the same households being repeatedly affected.
We also consider household reactions to shocks, tracing the likely impacts on children. Responses to shocks included eating less, with obvious consequences for children’s health and development. Responses which reduce household assets or increase debt levels were common and therefore shocks are likely to have long-term consequences for households – all the more so given that the same households experience multiple shocks over time.
Shocks are therefore part of the common experience of chronic poverty and their impact on households is likely to reinforce poverty cycles. We demonstrate this by showing a relationship between households being affected by some forms of shock and having an increased chance of either remaining or becoming poor. There are positive indications of how policy can support households either by reducing the extent of shocks (for instance by better environmental resource management or labour protection) or buffering families when these shocks occur (for instance through social protection, insurance or access to affordable credit). These measures can have long-term effects, mitigating the transmission of poverty from one generation to the next.
Shocks existed before the global food price crisis and economic downturn and, though a return to economic growth may be a necessary part of reducing poverty, this on its own will not reduce the vulnerability of many families to these adverse events. Measures to mitigate the effects of shocks are important not only in reducing poverty transmission but also to ensure that all families are able to share the fruits of economic growth and that this is broadly based.
This paper is one of two briefings that make use of early data from Round 3 of the Young Lives survey in 2009 to explore the extent and effects of economic and environmental shocks and adverse events on Young Lives and children and their households.
The paper begins by considering the recent global context, demonstrating a period of economic growth in Young Lives survey countries before the economic downturn in 2008. We then consider the extent of economic and environmental shocks and family illness or death reported by Young Lives families in two periods (2002–6 and 2006–9). The first of these periods (2002–6) coincides with relatively strong GDP growth in many countries (including in Young Lives countries) before the economic downturn and global food price crisis. Even in the context of strong national economic growth, however, many Young Lives households were reporting experiencing frequent shocks which had the potential to damage their well-being.
Different countries are being affected differently by the economic downturn, with more open economies more likely to be quickly affected by changes in international demand. Similarly, the impacts of global shocks may be experienced differently by different social groups within countries. The Young Lives samples are not nationally representative, as the focus is on poor children, but by logging what happened to households we can detect how change over time is affecting children and what similar (or different) processes are going on in each of the Young Lives countries, as well as noting disparities within the samples.
Comparing 2006–9 to 2002–6, more Young Lives households reported experiencing economic shocks in Ethiopia, Vietnam and in Andhra Pradesh in the later period. Fewer Young Lives households in Peru reported economic shocks in the 2006–9 periods than in the 2002–6 period. An examination of what caused these economic shocks suggests they were driven by changes in market prices. The picture that emerges here is one of a concentration of adverse events affecting particular households, and a cyclical pattern of the same households being repeatedly affected.
We also consider household reactions to shocks, tracing the likely impacts on children. Responses to shocks included eating less, with obvious consequences for children’s health and development. Responses which reduce household assets or increase debt levels were common and therefore shocks are likely to have long-term consequences for households – all the more so given that the same households experience multiple shocks over time.
Shocks are therefore part of the common experience of chronic poverty and their impact on households is likely to reinforce poverty cycles. We demonstrate this by showing a relationship between households being affected by some forms of shock and having an increased chance of either remaining or becoming poor. There are positive indications of how policy can support households either by reducing the extent of shocks (for instance by better environmental resource management or labour protection) or buffering families when these shocks occur (for instance through social protection, insurance or access to affordable credit). These measures can have long-term effects, mitigating the transmission of poverty from one generation to the next.
Shocks existed before the global food price crisis and economic downturn and, though a return to economic growth may be a necessary part of reducing poverty, this on its own will not reduce the vulnerability of many families to these adverse events. Measures to mitigate the effects of shocks are important not only in reducing poverty transmission but also to ensure that all families are able to share the fruits of economic growth and that this is broadly based.