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The Low Income Gap: A New Indicator Based on a Minimum Income Standard

Author

Listed:
  • Donald Hirsch

    (Loughborough University)

  • Matt Padley

    (Loughborough University)

  • Juliet Stone

    (Loughborough University)

  • Laura Valadez-Martinez

    (Loughborough University)

Abstract

In many high-income countries, governments seek to ensure that households at least have sufficient incomes to afford basic essentials such as food and clothing, but also to help citizens reach socially acceptable living standards allowing full participation in society. Their success in doing so is commonly monitored in terms of how many citizens are below a poverty line set relative to median income, and by how far below it they fall (the ‘poverty gap’). Yet the threshold below which this gap starts to be measured is arbitrary, begging the question of what level of low income needs addressing. A more ambitious measure, presented in this paper, considers the extent to which people fall short of a benchmark representing a socially agreed minimum standard. This ‘low income gap’ can be used to represent the distance a society has to go to eliminate income that is undesirably low. The paper presents the indicator, its meaning and some recent trends in the United Kingdom, where the methodology behind the indicator has been pioneered. The results demonstrate that this empirically derived benchmark has the potential to be of value in other countries, in assessing whether they are making progress in reducing low income.

Suggested Citation

  • Donald Hirsch & Matt Padley & Juliet Stone & Laura Valadez-Martinez, 2020. "The Low Income Gap: A New Indicator Based on a Minimum Income Standard," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(1), pages 67-85, May.
  • Handle: RePEc:spr:soinre:v:149:y:2020:i:1:d:10.1007_s11205-019-02241-6
    DOI: 10.1007/s11205-019-02241-6
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    References listed on IDEAS

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    Cited by:

    1. Guglielmo D'Amico & Riccardo De Blasis & Philippe Regnault, 2020. "Confidence sets for dynamic poverty indexes," Papers 2006.06595, arXiv.org.
    2. Andrew Dunn & Clare Saunders, 2022. "‘The Rise of Mass Poverty’? Breadline Britain/Poverty and Social Exclusion (1983–2012) Evidence Revisited," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(2), pages 929-946, November.
    3. Mathieu Dufour & Vivian Labrie & Simon Tremblay-Pepin, 2021. "Using the Market Basket Measure to Discuss Income Inequality from the Perspective of Basic Needs," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 155(2), pages 455-478, June.

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