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6105.0 - Australian Labour Market Statistics, Jul 2004  
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Feature Article - Children Living Without an Employed Parent


This article was published in the July 2004 issue of Australian Labour Market Statistics (cat. no. 6105.0).

INTRODUCTION

Children living without an employed parent, or children in jobless households, are seen by many analysts as being at risk of socioeconomic disadvantage. Children who do not live with an employed parent may be at higher risk of experiencing financial hardship in the short to medium term. These children may not have a role model of employment to follow, and so the joblessness of the parent(s) may mean that such children are more likely to have outcomes such as welfare dependency in the long term1. However, there may be positive effects for children living without an employed parent, for example, if the reason the parent is without a job is to care for children or to undertake study to try to improve the economic wellbeing of the household later on.


This article explores some of the concepts and issues surrounding this topic, and examines some of the different sources of data available on children living without an employed parent. Initially the article discusses possible measures and provides analysis of the results that these different measures produce. The article then uses the measure preferred by the ABS - children living without an employed parent - as the basis for analysis of data from the 2000-01 Survey of Income and Housing Costs.



CONCEPTS AND ISSUES

The number of children living without an employed parent is one of a range of measures available to indicate the number of children at risk of experiencing disadvantage. Income-based measures can be used if the main area of interest is financial disadvantage. Other indicators of possible disadvantage include measures of poor health or lack of education. The measure chosen should reflect the key concerns.


If the measure chosen relates to the participation in employment of parents or other household members living with children, there are still a number of choices to be made to define the measure precisely, as shown below:


Choices when attempting to measure children at risk of disadvantage

Diagram: Measures to determine children at risk of disadvantage.


Children

There are two definitions of children that could be used: children under 15 years and 'dependent children'. The term 'dependent child' is a broader concept. The ABS uses 'dependent child' to refer to any family member who is less than 15 years old, or who is 15-24 years old and a full-time student (except those classified as husbands, wives or parents).


Older dependent children (those aged 15-24 years) are more likely than children under 15 to have access to other sources of income, such as part-time work or Youth Allowance, rather than being reliant solely on their parents for income. For this reason there are some advantages to excluding them from analysis if the focus is on risk of financial hardship. The analysis in this article is of children under 15, as the group most at risk.


For the purposes of this article, a child under 15 is any individual under 15 who forms a parent-child relationship with another member of the household. In addition to natural, step or foster parent-child relationships, this also includes otherwise related children under 15 and unrelated children under 15. This means that, for example, a parent-child relationship could exist between two unrelated people, one of whom is under 15.


Families, households or parents?

There are three choices for a unit to be used as a basis to measure the participation in employment of people who have, or live with, children:

  • the parent(s) who reside with a child
  • the family2 of a child, which will also include other related persons 15 years or older who usually reside with the parent(s) and the child
  • the household3 in which a child lives, which will also include other families and unrelated persons 15 years or older who usually reside with the family.

Any of these measures may overstate the number of children at risk of living in disadvantaged circumstances if a parent living outside the household contributes to the economic wellbeing of the household.


Using a more restrictive measure (such as children living without an employed parent) may overstate the number of children at risk of financial hardship if someone else in the household contributes to the child's welfare.


However, using a less restrictive measure (such as children living in jobless households) may understate the number of children at risk, as other people living with the child, who are employed, may not provide financial support.


Parents are the most probable source of income support for children under 15 inside the household, which is why the ABS uses children living without an employed parent in its publications Measures of Australia's Progress (cat. no. 1370.0) and Australian Social Trends (cat. no. 4102.0).


If the area of interest is whether the child has an employed person as a role model, then using household, rather than family or parent, would include other employed people living with the child who might serve this function.


Table 1 shows the differences in the proportions of children included in each of the three different measures in 2000-01. Children living with one parent were much more likely to be living without an employed person than children living with two parents, in all of the measures. In 2000-01, of children living with one parent, nearly three in five (58%) did not have that parent employed, while almost half (49%) lived in a jobless household.

TABLE 1, Children under 15 living without an employed person(a) - 2000-01

Total children
Children living in households with no employed person
Children living in families with no employed person
Children living without an employed parent
'000
%
%
%

Living with one parent
762.5
49.2
54.3
58.5
Living with two parents
3,133.4
6.5
6.9
7.4
Total (%)
. .
14.8
16.1
17.4
Total ('000)
3,895.8
578.2
628.7
678.1

. . not applicable
(a) Aged 15 years or over.
Source: Data available on request, Survey of Income and Housing Costs.


Measures of joblessness

Unemployment and non-employment are the two main alternatives when measuring joblessness. In ABS surveys, unemployed persons are those aged 15 years and over who were not employed during the reference week, had actively looked for work at any time in the four weeks up to the reference week, and were available for work in the reference week. Non-employment is a broader measure. As well as those who are unemployed, it also includes those who were not employed and did not meet the criteria to be unemployed (and may not even want a job).


Most of the analysis in this article is based on the non-employment measure. This measure includes those who choose not to work or are unable to work, as well as those who are unable to find work. People may not need to work if they have other sources of income. Other reasons for not actively seeking work include a preference to spend time caring for children or undertaking study. The reasons for being without employment are an important consideration when attempting to analyse any disadvantage to children in jobless families or households. Choosing to care for children rather than having a job may benefit, rather than disadvantage, children in non-financial ways. If a parent undertakes study, the economic wellbeing of the family may be improved later on. Non-employment will capture the core groups at risk of disadvantage, but it will also include groups not at risk.


Using the unemployment measure, rather than non-employment, will exclude some families that are at a relatively high risk of disadvantage, such as those where the parents are discouraged job seekers. Neither measure includes families with underemployed parents (i.e. part-time workers who would like to work more hours), which may be at risk of disadvantage.

TABLE 2, Children under 15 living with unemployed or non-employed parents - 2000-01

Total children
Children living with unemployed parents
Children living without an employed parent
'000
'000
%
'000
%

Children living with one parent
762.5
88.3
11.6
445.8
58.5
Children living with two parents
3,133.4
*17.9
*0.6
(a)232.3
7.4
Total
3,895.8
106.2
2.7
678.1
17.4

* estimate has a relative standard error of 25% to 50% and should be used with caution
(a) Includes approximately 79,000 children living with one parent who is unemployed and one parent who is not in the labour force.
Source: Data available on request, Survey of Income and Housing Costs.


In 2000-01, about 3% of all children under 15 lived with unemployed parents (either in a two parent family where both parents were unemployed, or in a one parent family where that parent was unemployed). About six times as many children (17%) lived without an employed parent. The proportion of children living with unemployed parents or parents who were not employed was much lower for two parent families than for one parent families.



DATA SOURCES

The choice of data source may be influenced by some of the considerations discussed above. There are several ABS collections that provide information on children living without an employed parent, including the Census of Population and Housing, the Labour Force Survey, and the Survey of Income and Housing Costs. These three data sources are discussed below.


Census of Population and Housing

The Census of Population and Housing is conducted every five years and collects a range of demographic, social and economic information about all people (except diplomatic personnel) in Australia on census night. The census provides information on the characteristics of jobless households, including, for example: the structure of families (e.g. couple or one parent); whether parents are seeking full-time work, part-time work, or are not looking for work; and family and household income measures. The 2004 edition of the ABS publication Australian Social Trends (cat. no. 4102.0) includes an article on jobless families with children, based on census data.


The main advantages of using census data for analysis are that there is no sampling error, small area data are available, and some useful data items and cross-classifications are available. However, the five yearly census does not provide frequent time series or information on recent trends.


Labour Force Survey

The Labour Force Survey (LFS) is conducted monthly and can be used to provide estimates of 'jobless' families and related measures such as the number of children without an employed parent. Some data are available monthly, and additional information on children aged 0-4, 5-9 and 10-14 years is available annually in the June LFS.


The main advantages of using the LFS as a source for an indicator of jobless families are the frequency of the data and the relatively large sample size. Family data have been a by-product of the LFS since the early 1980s.


There are also some disadvantages of using the LFS as a source for this information. The LFS is not specifically designed to produce reliable family estimates. The purpose of the LFS is to provide information on the labour market activity of the usually resident civilian population of Australia aged 15 and over. LFS estimates of people who are employed, unemployed and not in the labour force are calculated to add up to independent estimates (or benchmarks) of the population. However, LFS family estimates are not benchmarked to the total number of children or families, since this benchmarking is not required for labour force estimation purposes. Given the level of interest in this topic, the ABS is currently considering ways to improve the quality of family estimates from the LFS through benchmarking and other means.


Survey of Income and Housing Costs

The Survey of Income and Housing Costs (SIHC) was conducted as a supplement to the Labour Force Survey from 1994-95 until 2002-03. This survey collected information on sources of income, amounts received and characteristics of persons. Data are available for every financial year from 1994-95 to 2002-03, except for 1998-99 and 2001-02. From 2003-04, SIHC will become the Survey of Income and Housing, and will be conducted every two years.


The SIHC is used as the data source for the analysis in this article because it provides data at more frequent intervals than the census, but also benchmarks to independent estimates of the number of children (unlike the LFS). Note that, for the following analysis by household composition (graph 2 and table 3), the population is restricted to children in one-family households. Children in households that contain more than one family, or one family plus other unrelated persons, are excluded.


Like the Labour Force Survey (and all sample surveys), the SIHC is subject to sampling error. The SIHC has higher standard errors than the LFS, being drawn from a sample of about 7,000 households (until 2000-01, then 10,000 households for 2002-03) compared to about 30,000 households in the LFS.



CHILDREN LIVING WITHOUT AN EMPLOYED PARENT

Composition

One parent families are the main group of families without an employed parent. Graph 1 shows that in 2000-01, in one parent families where the youngest child was under five, 79% of children were living without an employed parent. This compares to 46% of children in one parent families where the youngest child was between five and 14. This suggests that many of these lone parents are taking time out of the labour force while their children are very young. In contrast, the proportion of children in two parent families without employment in 2000-01 was 8% when the youngest child was under five and 7% when the youngest child was aged five to 14. In 2000-01, 55% of children living in two parent families had both parents employed.

Graph 1, Children living without an employed parent(a), By family type and age of youngest child - 2000-01
Graph: Graph 1, Children living without an employed parent(a), By family type and age of youngest child—2000–01



Changes over time

Between 1995-96 and 2000-01, there was little change in the proportion of children living without an employed parent (graph 2). The proportion of children living without an employed parent in one parent households declined from 60% in 1995-96 to 58% in 2000-01, while children living without an employed parent in two parent households declined from 8% to 7%.


Although the proportion of children living without an employed parent has declined between 1995-96 and 2000-01 for both one and two parent households, the total number of children without employed parents rose 8% between 1995-96 and 2000-01, due to the increase in one parent households. The number of one parent households increased 26% between 1995-96 and 2000-01, while the number of two parent households fell 5%.

Graph 2, Children(a) living without an employed parent(b)(c), Rates by household composition(d)
Graph: Graph 2, Children(a) living without an employed parent(b)(c), Rates by household composition(d)



Income characteristics

Table 3 shows that the main source of household income for families without an employed parent is government pensions or allowances. In 2000-01, government pensions or allowances were the main source of income for 86% of two parent households, and 95% of one parent households (where no parent was employed).


Table 3 also provides measures of equivalised disposable household income. This measure is adjusted to standardise income estimates with respect to household size and composition. It allows more meaningful comparisons between household types, because larger households normally need more income to maintain the same material standard of living as smaller households, and the needs of adults are usually greater than the needs of children. On the other hand, larger households can be expected to benefit from economies of scale of living together.


In 2000-01, two parent households where the parents were without employment had a lower mean equivalised disposable household income per week ($199) than one parent households without an employed parent ($218), or households with at least one employed parent ($461).

TABLE 3, Income by household composition - 2000-01(a)

Two parent household only, without an employed parent
One parent household only, without an employed parent
Household with at least one employed parent
Youngest child under 5
Youngest child 5-14
Total
Youngest child under 5
Youngest child 5-14
Total
Youngest child under 5
Youngest child 5-14
Total

Main source of household income (%)

Household has zero/negative income
0.0
**-0.7
**-0.3
0.0
0.0
0.0
**-0.1
*-0.3
*-0.2
Wages and salaries
0.0
0.0
0.0
0.0
0.0
0.0
82.7
86.3
84.7
Own unincorporated business income
**2.5
0.0
**1.2
0.0
0.0
0.0
13.9
10.7
12.1
Government pension or allowance
89.6
83.4
86.4
98.4
91.3
94.7
2.3
2.3
2.3
Other income
**7.9
**17.3
*12.7
**1.6
**8.7
*5.3
*1.2
*0.9
*1.1
Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Equivalised disposable household income ($)

Mean income per week
203
196
199
221
215
218
450
471
461
Median income per week
211
207
210
227
222
223
381
425
409

Number of children in each equivalised disposable household income quintile ('000)

Lowest ($0 to $246, per week)
97.2
64.8
162.0
122.9
125.9
248.9
179.3
164.1
343.4
Second ($246 to $351, per week)
**10.4
**18.6
*29.0
59.4
33.2
92.6
434.0
308.5
742.5
Third ($352 to $482, per week)
0.0
**1.5
**1.5
**3.5
**2.1
**5.7
390.2
417.9
808.1
Fourth ($483 to $644, per week)
0.0
0.0
0.0
0.0
**2.0
**2.0
209.5
358.9
568.4
Fifth ($645 and above)
0.0
0.0
0.0
0.0
0.0
0.0
167.2
204.2
371.4
Total children
107.6
85.0
192.5
185.9
163.2
349.1
1,380.1
1,453.7
2,833.8

* estimate has a relative standard error of 25% to 50% and should be used with caution
** estimate has a relative standard error greater than 50% and is considered too unreliable for general use
(a) One-family households only. Households containing more than one family, or a family plus other related persons, are excluded.
Source: Data available on request, Survey of Income and Housing Costs.


In 2000-01, children living without an employed parent were concentrated in the bottom two equivalised disposable household income quintiles. Just over three-quarters (76%) of children living without an employed parent were in the lowest household income quintile, compared to 12% of children living with at least one employed parent. However, there were almost as many children in the lowest household income quintile living with at least one employed parent (about 343,000) as there were living without an employed parent (411,000).



CONCLUSION

There are various measures related to children living without an employed parent. Each measure has advantages and disadvantages. The most appropriate measure will depend on the key concerns.


Most of the children living without an employed parent live in one parent households. The number of one parent households rose 26% between 1995-96 and 2000-01, while the number of two parent households fell 5%. For one parent households, the age of the youngest child appears to be a factor in whether or not the parent is employed, with the proportion of children living without an employed parent significantly reduced when the youngest child is over five.



FURTHER INFORMATION

For further information, please contact the Assistant Director, Labour Market, on Canberra 02 6252 6562.

For email enquiries, please contact Client Services on client.services@abs.gov.au.



END NOTES

1 Dawkins, P. and Kelly, P. 2003, Hard heads, soft hearts: a new reform agenda for Australia, Allen and Unwin.


2 A family is two or more persons, one of whom is at least 15 years old, who are related by blood, marriage (registered or de facto), adoption, step or fostering, and who are usually resident in the same household. The basis of a family is the presence of a couple relationship, lone parent-child relationship or other blood relationship.


3 A household is a person living alone or a group of related or unrelated people who usually reside and eat together. A household can contain more than one family, or no families (e.g. a group household).



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