Estimates of Poverty and Social Exclusion in Australia: A Multidimensional Approach

We measure the extent of poverty and social exclusion in Australia using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. For each individual, we construct a measure of social exclusion that recognises its multidimensionality, including its potential variability in depth at a point in time and in persistence over time. We distinguish seven dimensions or domains, as proposed in Scutella et al. (2009): material resources; employment; education and skills; health and disability; social; community; and personal safety. For each of these seven domains, several indicators of social exclusion are produced. A simple ‘sum-score’ method is then used to estimate the extent or depth of exclusion, with our measure a function of both the number of domains in which exclusion is experienced and the number of indicators of exclusion present within each domain. Sensitivity of findings to alternative weighting regimes for the indicators and to alternative methods, proposed by Capellari and Jenkins (2007), is examined. Persistence of exclusion is also briefly considered. Our exclusion measure identifies 20 to 30 per cent of the Australian population aged 15 years and over as experiencing ‘marginal exclusion’ at any given point in time. Four to six per cent are ‘deeply excluded’, and less than one per cent are ‘very deeply excluded’. We find that, although there are commonalities in the demographic composition of the socially excluded and the income poor, there are also some important differences. For example, persons 65 years and over represent a much smaller share of the most ‘excluded’ group than they do of the ‘poorest’; and couple and single families with children represent a larger share of the excluded than they do of the poor.