Individual Employment, Household Employment, and Risk of Poverty in the European Union. A Decomposition Analysis

This chapter investigates the relationship between poverty trends and employment, proceeding in two steps. The first step explores the link between individual employment and household employment. A ‘polarization index’ is defined in terms of the difference between, on the one hand, the actual share of individuals living in jobless households and, on the other, the hypothetical share of individuals living in jobless households assuming that individual employment is distributed randomly across households. The second step integrates the link that is so established between individual employment rates and household employment with an analysis of the relationship between household employment and poverty. An integrated decomposition of changes in the at-risk-of-poverty rates is presented on the basis of (i) changes in the poverty risks of jobless households, (ii) changes in the poverty risks of other (non-jobless) households, (iii) changes in household joblessness due to changes in individual employment rates and changing household structures and (iv) changes in polarization.