Working But Poor: A Cross-National Comparison of Earnings Adequacy

Abstract

This paper compares the ability of prime-age, able-bodies workers in the United States, Canada, the United Kingdom, Sweden, and the Netherlands to keep themselves and their households out of poverty by working. The authors look at poverty rates based only on the head’s earnings they then include the earnings of all members of the household. In both cases, many households with a head who works full-year, full-time remain in poverty, though more do when the head works less than full-year, full time. The earnings of heads can be supplemented by the earnings of spouse and others, and also by public sector tax and transfer policy. In particular, the effectiveness of the tax and transfer system in supplementing earnings varies across countries. Work is found to be an important strategy for avoiding poverty.