The value added of the Levy Institute Measure of Time and Income Poverty (LIMTIP)

Photo: Levy Economics Institute





 






Rania Antonopoulos

 

Program Director of Gender Equality at the Levy Economics Institute


We interviewed Rania Antonopoulos, coauthor of the report “Why Time Deficits Matter: Implications for the Measurement of Poverty”to understand the importance ofcombining the income and time poverty measurements in order to reach an effective reduction of poverty and advance towards more egalitarian societies.

 

 

 


 

What is the value added of the Levy measurement compared to the official and multi-dimensional poverty measurements?

The Levy Institute Measure of Time and Income Poverty (LIMTIP) identifies a conceptual gap in the poverty discourse - a certain silence, if you may –and recommends a measurement methodology that voices this omission,and corrects it.

Conceptually, official and multi-dimensional notions of poverty do not pay attention to the fact that in order to meet basic material needs and wants people have, time must be available to them to spendit on a variety of householdtasks, and on a daily basis, in addition to income which enables market purchases. To put it differently, standard poverty measuresimplicitly assume that all households and individuals have enough time to adequately attend to the needs of household members. What needs might these be? Examples include caring for children or the elderly; daily maintenance work; shopping and cooking; up keeping a sanitary and healthy living environment. Especially for low income people, these tasks are absolutely necessary for attaining a bare bones standard of living, anddepending on geographic and economic development conditions, it may be necessary to also devote time to gathering and carrying water, firewood, fodder or other free goods.

It is important to remind ourselves that internationally, the contributions of unpaid household production activities are well recognized. So much so that twenty years ago, the 1993 System of National Accounts recommended its inclusion in National Income Accounts and many countries have been collecting time use data to produce such GDP measures and satellite accounts. This was reaffirmed by work of the recent Stiglitz, Amartya Sen, Jean-Paul Fitoussi Commission Report. Curiously, when it comes to official poverty calculations, the links between household production and living standards have been largely ignored.There has not been aworking group or a set of recommendations that links household production to living standards. This omission has consequences. If unpaid household production work contributes to wellbeing, then, if and when some households face lack of time that forbids them to perform these essential tasks, this will translate into new costs. However since we do not focus on this dimension, the cost remains invisible.

 

From a measurement point of view, taking household production for granted when we quantify the incidence and the depth of poverty yields an unacceptably incomplete picture of both, and therefore official estimates provide inadequate guidance to policymakers. Simply put, two identical households in terms of size and composition, that also have access to an identical level of income, may experience very different living standards if one of them faces time constrains, i.e., a “time deficit” that prohibits the performance of basic household production tasks.

“... to promoting gender equality men should work less hours pay."

 

 

 

 

 

Now, among households that experience “time deficits”, some households may at least have sufficient income to attempt to fill in time deficits by purchasing market substitutes, for instance, restaurant meals a few times a week, hiring a nanny or domestic worker, enrolling young children in a daycare center. But, imagine a household, officially classified as non-poor, facinga time deficit that it cannot afford to cover by buying market substitutes due to insufficient income. Such a household will be encountering hardships not reflected in the official poverty numbers because it faces a time deficit and also won’t be able to hire a nanny or a domestic worker. Household essential needs that are assumed to be provided by household (unpaid) work are simply not met. For households already identified as poor by official statistics, if they face time deficits, it means that they are in even deeper poverty.

 

To get a more accurate calculus of poverty, we have developed the Levy Institute Measure of Time and Income Poverty (LIMTIP), a two-dimensional measure that takes into account jointly the necessary income and the necessary household production time needed to achieve a minimum living standard. This is the value added of the LIMTIP.

 

 

 

Why are time deficits so important for poverty reduction and gender equality?

Income poverty is judged against a threshold that is calculated and set at a level that allows for a minimum living standard to be reached. Poverty reduction takes place when households are able to bridge their income deficits. LIMTIP aims to bring into light the ‘hidden’ deprivations individuals and households experience due to the combined effect of time deficits and income insufficiency. To do that, it sets a different income threshold, one that corresponds to the poverty threshold of official poverty statistics plus the monetary equivalent needed to replace the household time deficit, which is calculated for each individual household. Sufficiency of income, in this new framework is judged by the ability to meet the income poverty threshold but also by the ability to buy out a time deficit through market goods and services. Meeting the income poverty datum but not the minimum household production needs means masking deprivations. Unmasking them and responding through policy interventions is therefore crucial for meaningful reduction of poverty.

The LIMTIP measure has also the advantage that it goes beyond the typical household level poverty assessment and sheds light into intra-household time poverty, time poverty as experienced by individuals within the household; that is, women separately from men. Official measures that provide gender disaggregated statistics simply count how many women (or men) live in poverty ridden households. This measure counts directly the individual women (and men) who are time poor and has the ability to assess, individual by individual, the depth of their poverty-inducing time deficit. Finally, it elaborates on the source, the underlying cause of time deficits of each individual: is it long hours of employment or too much time allocated to meeting household production needs, or both?

 

 

 


" Poverty reduction and improvement of gender equity require an integrated agenda

What we found, in three case studies we undertook, is that the ‘hidden poor’ are, as expected, both male and female; but poverty-inducing time deficits for men are based on very long hours of paid work (and travel time to reach their employment site) while for women the case is that they devote much less than full time hours to paid work but overcompensate by dedicating the bulk of their time on household production tasks. This type of division of labor reinforces gendered structures of inequality within the household but also in labor markets.

 

 

The male-breadwinner ideology is in fact firmly in place. As part of our research we conducted an experiment, we simulated a ‘what if’ scenario according to which all adults without a full time job suddenly received one and their compensation was comparable to the market wages individuals with similar characteristics receive. As expected, what we found is that the majority of new entrants were women. We anticipated this finding simply because Labour Force Participation (LFP) was lower for women than for men. And while, in this full employment simulation scenario, income poverty was reduced substantially, for many women (especially for those with children under 18 years old) the new income earned was not sufficient to replace their time deficits. For poverty reduction, early childhood development and other care services are instrumental. But, not only: the other important conclusion we can draw from this experiment/simulation is that wages for some types of occupations are terribly low - so low, that the time deficits incurred when another adult member enters the labor force cannot be bought out via, for example, hiring a domestic worker. This was the case for low income households but also for women living in middle income types of households. It’s important to note also that to promoting gender equality men should work less hours for pay. At the same time, increasing the low LFP of women must come hand in hand with labor market interventions so that wages do not work against them. The gender wage gap remains to date a big challenge and comparable worth policies deserve to be brought back in the policy dialogue.


 

Present briefly one concrete example in the Latin America and the Caribbean region where the implementation of the LIM-TIP measurement have resulted in important findings. Which are the main public policies needed to include and protect the “hidden poor”?

It is hard to isolate one finding, but I will try to be brief. In the first phase of this research project, we calculated LIMTIP estimates for Buenos Aires, Santiago de Chile and country-wide estimates for the case of  Mexico. LIMTIP in the case of the study for Argentina was 11.1 percent, compared to 6.2 percent for the official poverty line. For Chile, adjusting for time deficits increases the poverty rate to 17.8 percent from 10.9 percent for the official line. For Mexico the poverty rate increases to 50 percent from an already high 41 percent. This immediately shows that substantial numbers of people are left out of the official ranks of the poor. In addition, the LIMTIP estimates expose the fact that the depth of poverty, namely the income shortfall of the official pooris greater than normally assumed: 1.5 times more in Argentina and Chile, and 1.3 times in Mexico. These findings suggest that if labor market outcomes and social provisioning that reduces household production needs stay unchanged, income-support programs need to (a) broaden their coverage to include the hidden poor, and (b) increase the level of support to offset the income shortfall emanating from time deficits.

Three additional findings deserve mention. First, contrary to the view held by many, the professional and better paid individuals do not face as severe time deficits as the working poor. Second, women and men both suffer from poverty-inducing time deficits; but, the specific source of their plight differs: very long hours of employment for low-wage menfor the even lower waged women, though their hours of employment are lower relative to men, the demands of household production on their time are large enough to render them time-poor. Third, our estimates show the tremendous but hidden risks children face. Beyond the well-known vulnerability of children to official income-poverty, an alarming majority of them (around 70 percent) live in households with high time deficits.

Given these results, as mentioned above, we also tested the effectiveness of job creation for poverty reduction and simulated a hypothetical scenario in which all adults without a full-time job were now employed full-time. Under the prevailing patterns of pay and hours of employment, we find that job creation will go a long way toward reducing income poverty for some. Yet, for many others, it simply replicates the patterns described above: employment will provide entry into the ranks of the time-deficient working poor, not a ticket out of poverty. The findings are particularly important in the context of the inclusive growth agenda and the deteriorating employment conditions due to the latest global slowdown.


 

 

“…the  most  important issue is public recognicion of the fact that time deficits exist, that they impose hardships on families and that they can be  poverty-inducing…”




 

 


Poverty reduction and improvement of gender equity require an integrated policy agenda. There is little doubt that an inclusive development agenda ought to facilitate women’s labor force participation. However, in order to make employment a truly winning proposition for women, and men, two further areas require just as much policy attention. First, to alleviate the time deficits faced by working women and men, stricter regulation of working hours accompanied by above poverty levelwages ought to become targets towards which policy must gradually move all working age adults. Second, for women and working parents in general, early childhood development and afterschool programs offering hours of operation, that are appropriate for the work schedules of parents, and especially of women, must be made available. The co-responsibility of the state in care provisioning is central to enabling women to allocate more time to employment.

 

 

 

What are the keys factors that a country should possess in order to implement the LIM-TIP methodology, (in terms of information, political will, data, resources etc.)?

From a technical point of view, the construction of LIMTIP requires information about time and income data of individuals and their households, that is, time spent on household production, time spent on employment, household income from employment, and total household income. While the ideal scenario would be that income was reported at the level of each individual in the household and that all the data (individual and household level) and demographic characteristics were provided in the same survey, this is (at least for now) not the case unfortunately. Data matching procedures need to be performed therefore. The two basic survey instruments from which information can be compiled are time-use surveys and household income-expenditure surveys. Given the importance of intra-household division of household production in our schema, it is best to have information on the time spent on household production by all adults and older children in multi-person households.

I think though that the most important issue is public recognition of the fact that time deficits exist, that they impose hardships on families and that they can be poverty-inducing; that time deficits are not exclusively a woman’s issue and it is not only about the ‘double day’, due to the hardship that women face when they work for pay while having to take care of their families as well. It is mostly about households that seem they are making ends meet but in reality they are not able to meet fundamental basic needs in their households. It is also about underestimating the range and the depth of unmet needs of already vulnerable populations, below or around poverty level incomes. At the individual level, women suffer from time deficits, but men are affected badly as well. Above all, children are more vulnerable that we think and they suffer, simply because theadults they live with are time poor.

The aim of such public recognition and advocacy would be to ensure the needed data is collected and that it is used to revisethe official income poverty measures. In the short run, a commitment to create such a measure and publish it in parallel with official poverty headcount rates would be a step in the right direction. Ultimately, the goal is that the evidence will serve policy makers well in designing and custom tailoring the set of interventions that enable all citizens to improve their living conditions.

 

 

 

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