In-work poverty and labour market trajectories: Poverty risks among the working population in 22 European countries

Abstract

Is in-work poverty a low-wage or an unemployment problem, and is it the same problem all across Europe? Because of the definitional ambiguity, we really do not know. In this article, we use longitudinal European Union-Statistics on Income and Living Conditions (EU-SILC) data from 22 countries and derive a set of distinct clusters of labour market trajectories (LMTs) from information about monthly labour market position from a 36-month observation window and estimate in-work poverty risk for each LMT. The results show that in-work poverty is a problem that affects the self-employed and people in a marginal labour market position, that is, those who for different reasons move in and out of employment. Hence, in-work poverty is mainly an unemployment problem, not a low-wage problem. Besides the fact that the size of LMTs varies between countries, we also expected to find systematic country differences in the effect of LMTs. The analysis did not support that assumption.