Increasing Gap between Low Pay and Household Poverty and Its Implications on Anti-poverty Policy

The distribution of employment among households is gaining importance in social policy. If every household had one employed person, the distribution of earnings among households would be similar with the distribution of earnings among employed individuals. However, it has become common that households vary in the number of employed persons these days. Also, if raising employment tends to benefit poor workless households only partially, poverty reduction tools should be redesigned in the way that the distribution of household income is effectively changed. Changing employment distribution could be a powerful way to make social policy more pro－poor, considering that employment access is an important dimension for the household income and jobs are not evenly distributed, This study examines the impact of employment patterns within and across households, household composition and structure and their implication in terms of poverty reduction. Results demonstrate that the extent of overlap between low pay and poverty is found to be more limited than generally be expected. Increasing importance of household labor market attachment for alleviating poverty suggests the need to expand the active labor market policy.