The Working Poor: Too Low Wage Or Too Many Kids?
Danièle Meulders, Síle O’Dorchai

In 2003, the European Union adopted a new social indicator, the “in-work at-risk-of-poverty rate”. According to the European definition, the working poor are all workers who live in a household with an equivalised household disposable income below the poverty threshold. This indicator is often used as a kind of immutable object regardless of the fact that it is based on a series of assumptions that are rarely questioned although they have particularly strong consequences for the calculation of the in-work poverty risk and for the design of policies to combat it. The purpose of this paper is to show the volatility in the measured proportions of working poor according to different methodological choices in terms of the unit of analysis, the measure of income and the population of workers. By showing this volatility, we aim at tackling some of these generally unquestioned assumptions. We also carry out an in-depth country-specific econometric analysis of the characteristics of the working poor. We concentrate on the differential impact of individual characteristics, the household structure and employment-related factors on the in-work poverty risk according to whether individual or equivalised household income is used to measure this risk. Our analysis covers 8 European Union countries (Austria, Belgium, Spain, France, Ireland, Luxembourg, Poland, the United Kingdom) and is based on the 2007 wave of the European Statistics on Income and Living Conditions (EUSILC).

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