Recent Changes in the Distribution of the Social Wage

Abstract

This paper examines the distribution of the ¿social wage¿ benefits in kind from welfare services, including the National Health Service, state education, social housing, and personal social services. The current Government has put a strong emphasis on improving public services and has begun to translate this into higher spending. Although most measures of poverty ignore the social wage, its inclusion is potentially very significant in monitoring the impact of government policies on the poorest households. The paper produces estimates of the value of the social wage for 1996/7 and 2000/01, using data from several large-scale household surveys, and makes comparisons with estimates from previous work going back to 1979. The results show that people in poorer households receive a greater share of benefits in kind from welfare services than those in richer households and that this ¿pro-poor¿ bias has been rising gradually over the long-term. Since 1996/7, spending on welfare services has grown faster than in the past and there has been a further incremental shift in favour of lower income groups across all the major services. These changes have reinforced the re-distributional effects of tax and benefit policies over the same period, though they have not prevented inequality from rising.