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Whither Poverty in Great Britain and the United States? The Determinants of Changing Poverty and Whether Work Will Work

Author

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  • Dickens, Richard

    (Queen Mary, U of London and CEP, London School of Economics)

  • Ellwood, David T.

    (Harvard U)

Abstract

Scholars emphasize that poverty in Britain has risen sharply since the late 1970s. Meanwhile in the United States, both official figures and traditional poverty scholars report sharp declines in poverty. We seek to provide a comparison of poverty levels in Britain and the US based on a set of common definitions. We then proceed to ask what factors—demographic, economic, or policy—account for the observed changes in poverty in the two nations and what role could policy play in reducing poverty? We develop a procedure that allows one to trace out the relative impacts of altered demographics, rising wage inequality, work changes, and policy innovations in explaining changing poverty patterns. We find that the forces influencing poverty differ between nations and across absolute and relative poverty measures. Demographic and wage change is a dominant force in both nations. Britain has experienced a dramatic rise in workless households while the US has simultaneously had a sharp fall. These differences had a sizable impact on absolute poverty in both nations and a significant impact on relative poverty in Britain. Government benefits directly reduced relative and absolute poverty considerably in Britain over this period but had little impact in the US. However, changing patterns of benefits and work suggest that policy changes have significantly increased work in the US, particularly among single parents. In Britain, policy changes may have had the reverse effect, reducing work among many groups. The UK government has committed itself to reducing child poverty by half over the next 10 years and to its abolition within 20 years, largely through policy changes designed to make work pay. We conclude that any purely work-based strategy, which doesn’t tackle demographics and wage dispersion, may not have a dramatic effect on relative poverty.

Suggested Citation

  • Dickens, Richard & Ellwood, David T., 2001. "Whither Poverty in Great Britain and the United States? The Determinants of Changing Poverty and Whether Work Will Work," Working Paper Series rwp01-010, Harvard University, John F. Kennedy School of Government.
  • Handle: RePEc:ecl:harjfk:rwp01-010
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    References listed on IDEAS

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    Cited by:

    1. Alison L. Booth & Jan C. Van Ours, 2009. "Hours of Work and Gender Identity: Does Part-time Work Make the Family Happier?," Economica, London School of Economics and Political Science, vol. 76(301), pages 176-196, February.
    2. Arnstein Aassve & Simon Burgess & Matt Dickson & Carol Propper, 2005. "Modelling Poverty by not Modelling Poverty: An Application of a Simultaneous Hazards Approach to the UK," The Centre for Market and Public Organisation 05/134, Department of Economics, University of Bristol, UK.
    3. Gregg, Paul & Wadsworth, Jonathan, 2004. "Two sides to every story: measuring the polarisation of work," LSE Research Online Documents on Economics 19959, London School of Economics and Political Science, LSE Library.
    4. Richard Blundell & Andrew Shephard, 2012. "Employment, Hours of Work and the Optimal Taxation of Low-Income Families," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 481-510.
    5. Mike Brewer & Paul Gregg, 2001. "Eradicating child poverty in Britain: welfare reform and children since 1997," IFS Working Papers W01/08, Institute for Fiscal Studies.
    6. Stephen Nickell, 2004. "Poverty And Worklessness In Britain," Economic Journal, Royal Economic Society, vol. 114(494), pages 1-25, March.
    7. Richard Blundell & Hilary W. Hoynes, 2004. "Has 'In-Work' Benefit Reform Helped the Labor Market?," NBER Chapters,in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 411-460 National Bureau of Economic Research, Inc.
    8. Heckman, James J. & Masterov, Dimitriy V., 2004. "Skill Policies for Scotland," IZA Discussion Papers 1444, Institute for the Study of Labor (IZA).
    9. Miguel Sanchez-Martinez & Philip Davis, 2014. "A review of the economic theories of poverty," National Institute of Economic and Social Research (NIESR) Discussion Papers 435, National Institute of Economic and Social Research.
    10. Ian Irvine & Kuan Xu, 2002. "Crime, Punishment and Poverty in the United States," Department of Economics at Dalhousie University working papers archive uspov, Dalhousie, Department of Economics.
    11. Nolen, Patrick, 2006. "Unemployment and Family-Values: A Household Distribution Sensitive Measure of Unemployment and Some Applications," Working Papers 05-03rr, Cornell University, Center for Analytic Economics.
    12. Nolen, Patrick, 2013. "Unemployment and household values: Distribution sensitive measures of unemployment," Labour Economics, Elsevier, vol. 24(C), pages 354-362.
    13. Osberg, Lars, 2002. "Trends in poverty: the UK in international perspective: how rates mislead and intensity matters," ISER Working Paper Series 2002-10, Institute for Social and Economic Research.
    14. Nicolas Hérault & Guyonne Kalb & Rezida Zakirova, 2011. "Dynamics of Household Joblessness: Evidence from Australian Micro-Data 2001–2007," Melbourne Institute Working Paper Series wp2011n10, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    15. Weiss, Matthias, 2008. "Skill-biased technological change: Is there hope for the unskilled?," Economics Letters, Elsevier, vol. 100(3), pages 439-441, September.
    16. Mary C. Daly & Robert G. Valletta, 2000. "Inequality and poverty in the United States: the effects of changing family behavior and rising wage dispersion," Working Paper Series 2000-06, Federal Reserve Bank of San Francisco.
    17. James J. Heckman & Dimitriy V. Masterov, 2005. "Allander Series: Skill Policies for Scotland," NBER Working Papers 11032, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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