There is little hard evidence on the extent to which the ‘curse’ of intergenerational worklessness exists and what might be driving it. Research by Lindsey Macmillan finds that though the problem is overstated, there is indeed evidence of individuals from workless families churning in and out of the labour market at a more frequent rate to those from employed families. But what is it that makes those from workless families more at risk to this churn? The answer seems to be a combination of both the local labour market conditions and the family’s experience that have a combined impact on the sons employment. In other words, arguments of ‘dependency cultures’ cannot solely explain the phenomenon.
The “curse of intergenerational worklessness” as the Department for Work and Pensions called it in a 2010 press release sets out a bleak scenario. Generations of people living in poverty whose families have never known work and who depend on benefits to survive – a so-called “culture of welfare dependency”. Iain Duncan Smith paints a picture of estates where families haven’t had a job in three generations, “with life expectancy lower than the Gaza strip”. Popular culture has stoked the debate; Channel 4’s ‘Benefit Street’ has helped create a sense that sections of society prefer to receive handouts than wages.
But behind the headlines and political posturing, there is little hard evidence on the extent to which the intergenerational ‘curse’ exists and what might be driving it. In my PhD thesis, and a recent article on this topic, I considered the empirical evidence on the scale of the issue of intergenerational worklessness and the role that local labour markets play in this story.
I used evidence from the Labour Force Survey (LFS), the two British birth cohorts (National Child Development Study and British Cohort Study) and the British Household Panel Study to see if the problem of ‘never working families’ was supported by large-scale data. The LFS suggests that of all multi-generational households in the UK, in only 0.3% or 15,000 households both generations have never worked. And for around a third of these households the younger generation has only been out of full time education for less than 1 year. Looking at where generations overlap in the same household is somewhat restrictive. Focusing on data where fathers and sons can be tracked even when observed in different households, the story remains the same. There are very few families who never work across generations, driven by the fact that less than 2% of sons in each of the three data sources considered have never worked by age 23 and under 1% have never worked by age 29. The extent of the problem is just not as large as some people would have you believe.
This is not to say, however, that intergenerational worklessness isn’t a problem. The evidence shows that workless spells are associated across generations. In the LFS data, in 180,000 households (4% of the multigenerational households of working age), both generations are currently out of work and in 140,000 households both generations have been out of work for over a year. In data sources that track families through their working lives, sons with workless dads at age 10 to 16, spend 6-11% more time out of work from leaving full time education to 23 than sons with employed dads. They are also 15-17% more likely to spend a year or more in concurrent spells out of work during this period. This is measured when the sons are quite young and therefore labour market experiences may be more random. If this analysis is extended to look at later periods of the sons working life, sons with workless fathers spend up to 16% more time out of work from 23-29 and are 23% more likely to spend a year or more in concurrent spells out of work. Evidence suggests that spells out of work can also leave longer-term scars on both future wages and future employment. While the problem of ‘never working families’ is overstated, there is evidence of individuals from workless families churning in and out of the labour market at a more frequent rate to those from employed families. So what is it that makes those from workless families more at risk to this churn?
An obvious place to look is the labour market conditions of the area that families live. A father-son pair that live in Kent, with low unemployment rates, are both more likely to be employed than a father-son pair that live in Middlesbrough, with higher unemployment rates. It could be that the strength or weakness of the labour market where you grow up is driving this association across generations and leading to the observation that sons from workless families are more likely to be workless themselves. Surprisingly the evidence suggests that this is not the main reason for this intergenerational association. Instead what seems to be happening is that it is a combination of both the local labour market conditions and the family’s experience that have a combined impact on the sons employment. While sons growing up in Kent with a workless father have a similar labour market experience to their local peers with an employed father, a son with a workless dad growing up in a high unemployment area spends up to 30% more of his time workless than his friend with an employed dad who lives in the same place. It is only in the labour markets with high unemployment that sons with workless dads are disproportionately more likely to be workless than sons with employed dads.
The evidence therefore raises questions about the ‘culture of welfare dependency’ argument used to justify current welfare reforms (see DWP press release). This implies that in families where people receive welfare, this is a more acceptable lifestyle choice than in families where nobody claims. This clearly isn’t true in tighter labour markets. There is no difference in the labour market experiences of sons from families where the father worked or did not work in these places – said another way, sons with employed fathers are just as likely or unlikely to be out of work (and therefore claimants) as sons with workless fathers in these areas. The fact that the intergenerational relationship varies by outside economic forces suggests that a simple ‘culture of welfare dependency’ story does not hold. Whilst welfare could be a reason why people turn away from the labour market, the problem only exists when work disappears.
An alternative view is that informal labour market connections matter for job search and in high unemployment areas the role of networks in job search becomes increasingly important. There is limited data on networks in the UK but evidence from elsewhere suggests that informal connections help in finding a job, particularly for those who are out of work. As the cost of looking for a job increases with unemployment, as there are fewer jobs available, these informal contacts become increasingly important in providing a connection to a difficult labour market. For sons with workless fathers, the combination of high unemployment rates and weaker informal connections could be driving the higher rates of labour market churn.
So, while the problem of ‘never working families’ is overstated, there is evidence of families churning in and out of the labour market, particularly as unemployment rises. The fact that this issue is deeply embedded in the labour market suggests that arguments of dependency cultures cannot solely explain the phenomenon. More should be done to understand the mechanisms behind this so-called ‘curse’ rather than using the topic as a way to justify welfare reforms.
Note: This post is based on a longer journal article and gives the views of the authors, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting.
About the Author
Dr Lindsey Macmillan is a Lecturer in Economics in the Department of Quantitative Social Science, Institute of Education, University of London. Her research interests include intergenerational worklessness, intergenerational mobility, educational inequality and youth unemployment. Alongside her academic publications, Lindsey advises Government and third sector organisations including the Social Mobility and Child Poverty Commission. She is a visiting Research Fellow at the Centre for Analysis of Social Exclusion (CASE) at the LSE and the Centre for Market and Public Organisation (CMPO), University of Bristol.