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Vulnerability, Unemployment and Poverty: A Class of Distribution and Sensitive Measures, Its Axiomatic Properties and Applications

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  • Basu, K
  • Nolen, PJ

Abstract

Measures of unemployment and poverty have tended to focus solely on those currently unemployed or below the poverty line. This approach has ignored the members of society that are vulnerable to becoming unemployed or falling into poverty. Current literature in this area has implicitly assumed that since someone who is vulnerable experiences pain from the chance of becoming unemployed or falling into poverty, our standard measures of unemployment and poverty do not accurately account for this pain. The implication is that vulnerability is a `bad' and policies should aim to reduce the number of people who are vulnerable in a society. In this paper we argue that, at the macro level, vulnerability can be viewed as a 'good' because, with unemployment remaining constant, the presence of vulnerable people implies that there must also exist currently unemployed people who expect to find work in the near future. And a society where unemployment is more equitably shared is better than a society where the burden of unemployment is carried by only a few. Given this view of vulnerability we then suggest a class of measures that, unlike the standard unemployment rate, account for the amount of vulnerability that exists in a society. We show some attractive axioms that our measure satisfies, fully characterize our measure and apply it to data from the U.S. and South Africa.

Suggested Citation

  • Basu, K & Nolen, PJ, 2006. "Vulnerability, Unemployment and Poverty: A Class of Distribution and Sensitive Measures, Its Axiomatic Properties and Applications," Economics Discussion Papers 2911, University of Essex, Department of Economics.
  • Handle: RePEc:esx:essedp:2911
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    References listed on IDEAS

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    1. Cesar Calvo & Stefan Dercon, 2005. "Measuring Individual Vulnerability," Economics Series Working Papers 229, University of Oxford, Department of Economics.
    2. Vani K. Borooah, 2002. "A Duration‐sensitive Measure of the Unemployment Rate: Theory and Application," LABOUR, CEIS, vol. 16(3), pages 453-468, September.
    3. Saul, S., 1992. "An Illfare Approach to the Measurement of Unemployment," Papers e9204, Western Sydney - School of Business And Technology.
    4. Glewwe, Paul & Hall, Gillette, 1998. "Are some groups more vulnerable to macroeconomic shocks than others? Hypothesis tests based on panel data from Peru," Journal of Development Economics, Elsevier, vol. 56(1), pages 181-206, June.
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    Cited by:

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    2. Sripad Motiram & Karthikeya Naraparaju, 2014. "Unemployment burden and its distribution: Theory and evidence from India," Working Papers 341, ECINEQ, Society for the Study of Economic Inequality.
    3. Mouhamadou Niang, 2014. "Gender gaps in recurrence and concentration of unemployment: Evidence from youth leaving France’s education system," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-25, December.

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