The Relative Contributions of Wage and Hours Constraints to Working Poverty in Britain

We explore the implications of labour demand constraints on the propensity to experience poverty. Since these constraints can manifest themselves in terms of both prices and quantities, we focus particularly on the relative contributions of underemployment and underpayment. Our analysis suggests that there has been a significant increase in working poverty in Britain over the period 1985-1996, the majority of which can be attributed to underpayment. Underemployment, however, is seen to represent a significant, and increasing, constraint on the ability of employees to escape poverty.