Unemployment is the Principal Cause of Poverty
By Peter Sheehan
The idea that unemployment is the principal cause of poverty among those of workforce age has been a central finding of poverty research. The precise nature of this key relationship has changed along with changes in the labour market, but unemployment remains a perennial cause of poverty among the working-age population. This paper, written in appreciation of the contribution made by Professor Peter Sheehan to work in the area, examines the links that exist between employment, unemployment, joblessness and poverty against the background of the growing diversity of labour market trends. After briefly reviewing the recent controversy that has surrounded the measurement of poverty trends in Australia, the paper examines the complex empirical links between income poverty, the employment status of individuals and the incidence of joblessness among households.
A major finding is that a full-time job is needed to produce sufficient income to raise people above the poverty line. These results are then supplemented by an analysis that combines evidence of low-income with evidence of hardship or deprivation. The use of direct deprivation or hardship measures to supplement the indirect income-based measures of poverty does not affect the central conclusion that employment can only make substantial in-roads into poverty if it is full-time.
Overall, the results demonstrate that unemployment continues to be a major cause of poverty in Australia and that employment only provides an escape when it comes in the form of a full-time job. Because many of the new jobs created over the last two decades have been either part-time or casual, they have not been sufficient, by themselves, to protect workers and their families from poverty. Download
By Peter Sheehan
The idea that unemployment is the principal cause of poverty among those of workforce age has been a central finding of poverty research. The precise nature of this key relationship has changed along with changes in the labour market, but unemployment remains a perennial cause of poverty among the working-age population. This paper, written in appreciation of the contribution made by Professor Peter Sheehan to work in the area, examines the links that exist between employment, unemployment, joblessness and poverty against the background of the growing diversity of labour market trends. After briefly reviewing the recent controversy that has surrounded the measurement of poverty trends in Australia, the paper examines the complex empirical links between income poverty, the employment status of individuals and the incidence of joblessness among households.
A major finding is that a full-time job is needed to produce sufficient income to raise people above the poverty line. These results are then supplemented by an analysis that combines evidence of low-income with evidence of hardship or deprivation. The use of direct deprivation or hardship measures to supplement the indirect income-based measures of poverty does not affect the central conclusion that employment can only make substantial in-roads into poverty if it is full-time.
Overall, the results demonstrate that unemployment continues to be a major cause of poverty in Australia and that employment only provides an escape when it comes in the form of a full-time job. Because many of the new jobs created over the last two decades have been either part-time or casual, they have not been sufficient, by themselves, to protect workers and their families from poverty. Download
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