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Low Pay and Household Poverty

Listed author(s):
  • Brian Nolan

    ()

  • Ive Marx

    ()

Registered author(s):

Low pay is conventionally measured in terms of the gross earnings of the individual, related to benchmarks derived from the distribution of earnings such as half or two-thirds of the median. Poverty status, on the other hand, is usually assessed on the basis of the disposable income of the household, adjusted for size and composition. The relationship between the two - low pay and poverty - is by no means straightforward, but improving our understanding of it is critical to policy formulation. In this paper we draw on two data sources to investigate what that relationship looks like empirically in industrialized countries: the Luxembourg Income Study database and the European Community Household Panel. The extent of overlap between low pay and poverty is found to be often rather more limited at an aggregate level than might generally be expected, but there is also some variation across countries. These results are based on snapshots from cross-section data, and the importance of a dynamic perspective in this context is emphasized. In conclusion, some of the policy implications are explored.

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File URL: http://www.lisdatacenter.org/wps/liswps/216.pdf
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Paper provided by LIS Cross-National Data Center in Luxembourg in its series LIS Working papers with number 216.

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Length: 33 pages
Date of creation: Nov 1999
Publication status: Published in In Labour market inequalities: problems and policies of low-wage employment in international perspective, M. Gregory (ed), Oxford: Oxford University Press, 2000, p. 100-119.
Handle: RePEc:lis:liswps:216
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  1. Timothy Smeeding & Gunther Schmaus & Brigitte Buhmann & Lee Rainwater, 1988. "Equivalence Scales, Well-Being, Inequality and Poverty: Sensitivity Estimates Across Ten Countries Using the LIS Database," LIS Working papers 17, LIS Cross-National Data Center in Luxembourg.
  2. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-764, July.
  3. Nolan, Brian & Whelan, Christopher T., 1996. "Resources, Deprivation, and Poverty," OUP Catalogue, Oxford University Press, number 9780198287858.
  4. Van den Bosch, Karel & Callan, Tim & Estivill, Jordi & Hausman, Piette & Jeandidier, Bruno & Muffels, Ruud & Yfantopoulos, John, 1993. "A Comparison of Poverty in Seven European Countries and Regions Using Subjective and Relative Measures," Journal of Population Economics, Springer;European Society for Population Economics, vol. 6(3), pages 235-259.
  5. Blank, Rebecca M. & Card, David & Robins, Philip K., 1999. "Financial Incentives for Increasing Work and Income Among Low-Income Families," Department of Economics, Working Paper Series qt2f15x7sg, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  6. Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 605-637.
  7. Callan, Tim & Nolan, Brian, 1991. " Concepts of Poverty and the Poverty Line," Journal of Economic Surveys, Wiley Blackwell, vol. 5(3), pages 243-261.
  8. Amanda Gosling, 1996. "Minimum wages: possible effects on the distribution of income," Fiscal Studies, Institute for Fiscal Studies, vol. 17(4), pages 31-48, November.
  9. Scholz, John Karl, 1996. "In-Work Benefits in the United States: The Earned Income Tax Credit," Economic Journal, Royal Economic Society, vol. 106(434), pages 156-169, January.
  10. David Neumark & William Wascher, 2002. "Do Minimum Wages Fight Poverty?," Economic Inquiry, Western Economic Association International, vol. 40(3), pages 315-333, July.
  11. Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, vol. 106(436), pages 639-649, May.
  12. Whitehouse, Edward, 1996. "Designing and Implementing In-Work Benefits," Economic Journal, Royal Economic Society, vol. 106(434), pages 130-141, January.
  13. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, vol. 102(414), pages 1067-1082, September.
  14. Richard V. Burkhauser & T. Aldrich Finegan, 1989. "The minimum wage and the poor: The end of a relationship," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(1), pages 53-71.
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