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Daniel Seikel and Dorothee Spannagel

At present, in-work poverty is on the rise in many European countries. At the same time, there is a widely held political belief that employment is the best route out of poverty. Current social and labour market policies throughout Europe are characterised by a strong activation turn. National and European Union (EU)-level policy-makers focus predominantly on the promotion of active labour market policies. However, this approach does not pay attention to the circumstances of the employment the individuals have to take up. This observation serves as starting point for the chapter. It examines how active labour market policies are linked to in-work poverty. The authors analyse labour market policies in 18 European countries using the 2013 EU Statistics on Income and Living Conditions (EU-SILC) data and the 2012 wave of the Organisation for Economic Co-operation and Development (OECD) Active Labour Market Policies Database. Their findings show that active labour market polices with a stronger focus on demanding than on enabling strategies lead to higher in-work poverty rates.

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Jeroen Horemans

Both part-time and temporary employment have been shown to be associated with high poverty rates across Europe. Yet, theoretical arguments as to why this is the case remain scarce. Given the multifaceted nature of in-work poverty, the main aim of this chapter is to unravel the different mechanisms that either cause or potentially limit the poverty risk of both groups of atypical workers. The results indicate that both groups are unable to secure a decent income to maintain themselves; not to mention their inability to sustain a family. However, their poverty risk remains remarkably limited when all income sources are taken into account. The authors find that temporary and part-time workers tend to be protected against poverty differently. Government transfers are particularly important for temporary workers, as they partially compensate periods out of work. Part-timers are more likely to rely on the earnings of other household members to avoid poverty, but with important differences across countries.

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Asaf Levanon and Evgeny Saburov

While the share of workers among the poor varies across countries, working poverty is not uncommon. This is especially true in Israel, where the incidence of poverty among workers has risen dramatically in recent years. Currently, about 12 percent of working families live below the poverty line in Israel. The rise in the share of the poor among workers became especially pronounced in Israel since 2003, when the Israeli government reduced the generosity of several welfare programs and installed stricter eligibility conditions. As a result, families with at least one working parent currently account for about 50 percent of the families living in poverty in Israel. The composition of the working poor population in Israel reflects the general contours of inequality in the country. Working poverty is closely connected with household structure and ethno-national distinctions. By contrast, distinctions by age, which play a major role in other institutional contexts, play a smaller role in shaping poverty prospects in the Israeli context. The chapter builds on a typology of three major antecedents of poverty among workers – ethnicity, household structure and age – and documents their changing association with the likelihood of poverty during a 21-year span in which major demographic and institutional changes have occurred in the Israeli society and labor market. The chapter utilizes data from the Israeli Income Survey, from 1991 to 2011. Results document a pronounced increase since 2000 in the risk of poverty among the Arab population, single-headed households and households with more than two children. The chapter discusses these trends in light of changes in the institutional context in Israel, most notably the changes in welfare policy.

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Wim Van Lancker and Jeroen Horemans

In the literature on in-work poverty (IWP), childcare services are often assumed to be an effective policy instrument in reducing the number of working poor. However, this assumption has never been properly put to the test. This chapter provides, for the first time, empirical evidence on the role of childcare services in combating in-work poverty. First, it gives a conceptual overview of the pathways through which childcare service use is expected to reduce in-work poverty. Second, a comprehensive overview of the literature on the employment effects of childcare use is provided. Third, drawing on the 2012 wave of the European Union Statistics on Income and Living Conditions (EU-SILC), the link between using formal childcare and IWP is examined at both the micro and the macro level. The results provide evidence for an aggregation paradox: there is no link between the level of formal childcare use and the IWP rate at the country level, while using childcare at the household level is related to a lower risk of being working poor. This can be explained by the fact that families using formal care are also families with higher levels of work intensity. Finally, the authors argue that the type of care matters, as they find that informal care arrangements are related to higher levels of IWP.

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Henning Lohmann

With the growing body of research on the working poor, a broader discussion of concepts and measurement has evolved. In-work poverty is a hybrid concept which – in contrast to concepts such as low wage work – combines the labour market position of an individual with a poverty perspective focusing on the living standard at the household level. Defining and measuring in-work poverty requires answers to two questions: ‘Who is a worker?’ and ‘What is poverty?’. The chapter discusses both and provides an in-depth discussion of measurement approaches, in particular those developed by the US Bureau of Labor Statistics (BLS), Eurostat and the International Labour Organization (ILO). Furthermore, it shows empirically how the incidence and structure (for example, by gender) of in-work poverty differ according to measurement approach.

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Brian C. Thiede, Scott R. Sanders and Daniel T. Lichter

This chapter examines how family structure shapes patterns of poverty among workers in the United States (US) and the United Kingdom (UK). First, the authors offer a conceptual overview of the links between family structure, work and poverty. Then, using data from the Luxemburg Income Survey, they provide a statistical portrait of changes in the incidence of in-work poverty by family type over the 1994 to 2010 period. Their results show substantial gradients in in-work poverty across different family structures. With few exceptions, working households headed by single adults face considerably larger poverty risks than working households headed by married or cohabitating couples. Over most of the 1994_2010 period, the penalty for single workers was larger in the US than the UK, as were the absolute levels of in-work poverty in each marital status category. The results also show a notable, positive association between in-work poverty risk and the number of children in the household. The comparatively high rates of in-work poverty among single-parent families and those with children, especially in the US, suggest that work alone may not be an economic panacea. The rise in single-parent families suggests that work-based welfare reform may require other policy interventions that increase the economic benefits to work.

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Leen Vandecasteele and Marco Giesselmann

This chapter highlights the potential of a longitudinal approach to gain better insight into the dynamic patterns of working poverty. While cross-sectional research can show us the characteristics of people at risk of in-work poverty, it cannot show us how transitory or persistent in-work poverty is. A longitudinal approach can further our insight by showing the duration of in-work poverty, the typical sequence of events leading to working poverty and the patterns of exit from in-work poverty. It can furthermore show us which population groups are at risk of persistent working poverty, and how episodes of working poverty are embedded in the life course. The authors start this chapter by highlighting the advantages of a longitudinal approach to working poverty. They then review the existing research evidence on dynamic approaches to poverty and employment, before introducing the research design needed to study dynamics of working poverty. This includes a discussion of the type of data necessary (socio-economic household panel data), as well as a brief overview of the relevant analysis techniques. The chapter then includes empirical examples of the dynamics of in-work poverty.

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Henning Lohmann and Eric Crettaz

The in-work poverty risk differs within and across countries. In this chapter the authors focus on explanations of in-work poverty in and across rich countries, in particular in Europe. Combining earlier proposals they develop a model for the explanation of the incidence and structure of in-work poverty taking into account economic and institutional characteristics as well as individual and household-related factors. They provide a systematic comparative overview on previous research and single out commonly addressed topics and research gaps. Adding to the recent body of literature, they carry out a multilevel analysis based on the 2013 wave of the European Union Statistics on Income and Living Conditions (EU-SILC). The analysis shows that in-work poverty is the result of a complex interplay between individual and household earnings, household needs and the availability of transfers.

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Sophie Ponthieux

The working poor are people who work and who live in poor households. But with poverty being assessed at household level, the same individual labor’s market outcomes may or may not result in poverty, depending on family configurations. Moreover, the household dimension of in-work poverty conceals unfavorable individual situations of activity. This results in a particular paradox: while women are highly over-represented in the low part of the earnings distribution, they are not, on average, particularly over-represented among the working poor. The chapter investigates the extent of this paradox in a selection of European Union countries and explores an alternative approach, in terms of ‘poverty in earned income’, to overcome the gender bias of the standard indicator.

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Amy Horton and Jane Wills

As low pay and in-work poverty have proliferated, demands for a higher, ‘living wage’, have gathered strength, particularly in the United States (US) and the United Kingdom (UK). Two decades since the first modern living wage campaign succeeded in Baltimore, a vibrant movement is challenging low pay across the US. In the UK, the government announced a ‘National Living Wage’ in 2015. This chapter reviews the efficacy of the living wage as a means of tackling in-work poverty. It begins by examining the extent to which low pay is a cause of household poverty, before explaining how living wages are calculated, and briefly outlining the history of the movement. It then summarizes existing research on the impact of living wages on poverty and employment, as well the potential consequences of scaling up the living wage. The politics of the living wage are explored. The concept has served to mobilize broad coalitions of labour and community groups to challenge the marginalization of low-paid workers. However, the living wage also raises questions about where responsibility lies for tackling in-work poverty. Lastly, the chapter considers what future direction the living wage movement might take in order to make a greater impact on in-work poverty.