Professional Documents
Culture Documents
Surendra Reddy
BSC,MBA,MSC(maths),PGPM,PGDHRM, SAPR/3, Mainframes, Ph.D(Mgt)
Constraints on Analysis
Precise estimates of the social impacts of recession are difficult:
Many social effects may not yet be visible Social impacts often lag substantially behind labour market effects of recession which, in turn, lag behind economic crises. Social impacts vary across countries (not least due to policy responses) Regions in the UK are very unevenly affected There is no uniform pattern in past UK recessions (mid 70s, early 80s, early 90s, early 2000s) to use as a guide.
Stuckler et al (Lancet 2009) looked at the effect of rising unemployment on health in 26 countries, 1970 2007, using age-standardised and age-specific mortality data, and correcting for population ageing, past employment and mortality trends.
The research only looks at effects within three years so may underestimate total effects.
Rosenfelds (2009) study of property crime and homicide in USA 19702006: Measures for unemployment rates, GDP pc and index of consumer sentiment (controlling for demographics, age and race, and policing and sentencing) are correlated with each other and with both acquisitive crime and homicide. Economic crisis increases acquisitive crime and this in turn increases homicides by exposing more people to risky and lawless situations.
For every US$ 10 more investment in ALM policies there was a 0.038% lower effect on suicide rates of people under 65 across countries (Stuckler et al). At US$ 190 pc rises on unemployment had no adverse effects on Suicide. Both Finland and Sweden saw suicide rates drop in early 1990s despite rapid rises in unemployment. Stuckler et al put this down to better unemployment protection.
Substantial rise for Fraud and Forgery (up by 5% on previous year) with a 16% rise year on year in previous quarter.
One might expect to see a rise in ethnically and religiously related crime but this was not visible for data in 2008.
Percentage Change in Numbers of Recorded Crimes, Oct to Dec 2008, Compared with Same Quarter in Previous Year. (Home Office Statistical Bulletin April 2009)
Lack of annual data on the main measures of social cohesion (trust in other people and institutions, tolerance etc) makes it difficult to match trends in these measures with recession indicators. However, various indicators of social cohesion (trust; violent crime) co-vary with income inequality across countries. If recession leads to further rises in inequality we may impute that trust in others and in institutions is likely to drop further.
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gini 1992-2000
Violent crime: no of homicides, rapes and robberies per 100.000 Data from Interpol
Correlation: r = .71***; p = .000; N = 24
Household income inequality rose for the third successive year to 2008/9 and is now at the highest level since 1961when the current series began (IFS, 2009). It is hard to predict the future trend. Past experience of recessions suggests no clear pattern. Inequality declined during mid 1970s recession (when top rates taxes were at 70%); rose during the early 1980s recession (when top rates taxes were brought down); and remained stable during early 1990s recession.
In the absence of more policy interventions to mitigate inequality, the current recession in the UK seems likely to exacerbate many negative aspects of social cohesion, reinforcing the downward trend in trust and tolerance. We are already seeing evidence of growing intolerance in some areas. Growing support for BNP and England Defence League .
Policy Implications
Priority must be given to reversing the long run increase in inequalities in income (and wealth), which stifle mobility, and to mitigating the adverse social effects of unemployment. Active Labour Market policies have been shown to reduce income inequalities (Nickell and Layard, 1998) and to reduce adverse health effects of unemployment. These must be targeted equally at young and older people alike.
Enhancing trust requires a long-term cultural shift that can only be achieved by restoring public perceptions of fairness. Requires effective measures to curb excessive earnings at the top (Changes in Corporate Governance?) and to re-distribute some of the individual gains from speculation in finance and housing (Tobin and Land Value taxes?).