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This chapter examines replacement rates across Europe using an integrated European tax-benefit model. It is argued that the household context must be taken into account when comparing measures of well-being both in- and out-of-work across countries. Replacement levels alone cannot be used to draw firm policy conclusions. The highest replacement rates are found for groups with the lowest household incomes while in-work, indicating the need for a comprehensive analysis of the income situation in different labour market states.

This chapter discusses the microeconomics of the rural–urban migration of labour in China. It states that the empirical analysis of the previous chapter was based on surveys that provide only limited or descriptive information. The chapter describes the two surveys on which the microeconomic analysis will be based, and also examines the causes of migration in two ways: by analysing the characteristics of migrants relative to non-migrants and by reporting their attitudinal responses. It also analyses the relationships between migrant income and other sources of household income. The chapter examines the processes of migration: the role of family, information flows, and urban contacts in migration decision. Lastly, it considers some of the consequences of migration, including the contribution that migration makes to rural incomes and to the alleviation of poverty.

This chapter examines the degree to which the number of children lowers the income status of female-headed households. The US situation is compared with that of other industrialized countries. In the United States, female heads of households are relatively well educated, have a relatively larger number of children, and are more likely to work. At the descriptive level, their after-tax income status is the highest among those in these six countries. Yet, after public and private income transfers are distributed, their income status plunges to the second lowest, next only to Canadians’. In the Nordic and European countries, social policy interventions have improved the income status of households with children, particularly female-headed households. The provision of various forms of public income transfers, including children’s allowances, maternity benefits, Social Security benefits, unemployment insurance, and workers’ compensation, has effectively smoothed out the distribution of disposable household income, mitigating the impact of children on the income status of female-headed households in these countries.

This chapter looks in depth at the possible implications of ETR for household distribution. It starts with a literature review, which shows that ETR in principle can be regressive, especially when it applies to household energy use, but that there are various ways in which this regressive effect can be mitigated. It then proceeds to analyse, using the E3ME model, the ETR scenarios described in Chapter 9. Because in this case the ETR increases household income, the income for all household groups increases, but in general those for middle quintiles increase by a smaller proportion than for the top and bottom quintiles. A rather different pattern emerges from a distributional analysis of an ETR for German households, when clearly regressive effects are apparent, but these are small, and could therefore largely be removed using revenues from the ETR.

The United States is facing a growing problem in inequality in terms of income which has dictated the course of the country’s economic growth. In order to study the relationship of income and mortality rate in the United States, this study considers retirement, unemployment, reductions in work hours, widowhood, separation and divorce as variables. These factors affect the household income of an American family. The study focuses on the changes recorded in life expectancy of an individual and death rates according to age. The study also focuses on the macroeconomic variables of the United States for the past 25 years and the inequality in the household income distribution. And then, this study deals with the relationship of mortality to household income.

This chapter introduces the British Household Panel Survey (BHPS), the data source underpinning the book's empirical analysis. The BHPS is described in detail — the design, sample size and response (including attrition), imputation, and weighting. The second part of the chapter explains how the net household income variable that is used in the analysis reported in the rest of the book is derived. As part of the data quality assessment, it is shown that BHPS cross-section distributions of income correspond well with distributions derived from the ‘Households Below Average Income’ data that are derived from the Family Resource Survey — the UK's specialist income survey and the basis of Britain's official income distribution statistics.

This chapter discusses the economic situation of the Pandit household. Topics covered include the traditional sources of household income; recent changes in the pattern of economic pursuits; present-day sources of collective and individual incomes; household income, patterns of spending, and levels of living; joint ownership of property; and rights of inheritance.

This is the last of six chapters that focus on one country in depth: the USA in this case. The Great Recession (GR) was the most dramatic economic downturn that the USA experienced in more than six decades. Total nonfarm employment fell by 5%, more than at any point since the nation returned to a peace-time economy following the Second World War. The chapter covers the impacts of the GR on inequality of wages and family incomes, and poverty, comparing these impacts to those in the previous three recessions and exploring the degree to which the tax and transfer system mitigated these impacts. Inequality growth was mixed during the GR. Some measures of inequality rose, others remained flat, and others declined. Most measures of inequality, however, remained at or near historic high levels, and poverty increased for everyone except elderly people, who were relatively well protected.

This chapter examines the mismatch between poverty measured indirectly using income and direct measures focusing on indicators of material deprivation, using both comparative and longitudinal perspectives to bring out the various contributing factors and their implications. It begins with a discussion of the reasons why one might expect a household's current equivalized income to have difficulties in fully capturing its command over financial resources in relation to its needs, and thus anticipate a priori that relying simply on income to measure poverty could be problematic. It then investigates the extent of overlap or mismatch between being below a relative income poverty threshold and above a corresponding consumption-related deprivation threshold, for twenty-six European countries. It looks at the cross-classification of persons by these income poverty and deprivation standards, distinguishing those who are both income poor and deprived, income poor but not deprived, deprived but not income poor, and neither income poor or deprived. Finally, the chapter turns from a static cross-sectional perspective to an analysis of the persistence of income poverty and deprivation over time, using the longitudinal data from the European Community Household Panel.

This chapter describes individuals' income-age trajectories. A picture of these looks like a plateful of cooked spaghetti but it is shown that this spaghetti can be unravelled using a statistical model. Differences in lifecycle income profiles reflect differences in income at the start of the working life and in income growth rates, and the association between initial incomes and income growth rates. There is also a role played by individual-specific income changes from one year to the next, representing transitory variation, measurement error, or events such as having children, or family formation or dissolution. The analysis is undertaken initially in terms of income measured in terms of wages but results are also presented for the needs-adjusted household income measure that is used throughout the rest of the book.

This chapter analyses the correlates of child nutritional status in rural India in an attempt to understand which drivers may be used as entry points to policy intervention. Using children’s standardized weights as a measure of their nutritional status, the analysis uses a health production function framework, in which child nutritional status is postulated as a function of food intakes—as measured by the frequency at which various foods were consumed in the previous week—and various individual-, parental-, household-, and village-level socio-economic factors. The analysis is based on unit record data on 16,755 pre-school rural children in the 1998–9 National Family Health Survey (NFHS). A unique feature of the estimation method is an explicit accounting of sequential fixed effects at the parent, household, and village levels. The chapter suggests that household incomes positively impact the nutritional status of children. However, the authors argue that there is no single solution to the problem of child undernutrition—what is required is a set of complementary strategies.

The chapter looks “behind” standard summary measures of inequality to identify where distributional changes occurred in eight societies over the longest period available in the Luxembourg Income Study Database, focusing on how inequality has grown in these societies (e.g., upgrading, downgrading, polarization). Methods based on the relative distribution are used to decompose overall distributional change into changes in location and shape. This is done for four high-income societies, three transitional societies, and Taiwan. A similar analysis is performed for female-headed households in the United Kingdom and the United States. The goal of this research is to use information on change in the first two moments of the income distribution to explore the degree to which various accounts of rising inequality and middle-class decline are consistent with the actual pattern of distributional change, and to generate new insights into this process.

Numerous studies have found that the distribution of income in the United States has become increasingly unequal—in particular, the share of income accruing to the highest-income households has increased, whereas the share accruing to other households has declined. The primary source for information on the income distribution in the United States is the Annual Social and Economic Supplement to the Census Bureau’s Current Population Survey (CPS). In an influential paper, Thomas Piketty and Emmanuel Saez employed an alternative method, using data from tax returns to examine market income inequality in the United States over almost a century. Each of those data sources has strengths and limitations. This paper presents estimates of the distribution of household income in the United States, derived from a statistical combination of data from the Current Population Survey and from samples of income tax returns. This combined series overcomes some limitations of estimates produced from either the CPS or the income tax data alone: it covers the full population while maintaining the richness at the top of the income distribution, and can yield comprehensive estimates of the effect of the tax and transfer system on the full income distribution.

The stratification of Europe combines two trends: the economic convergence among European economies and the within-nation polarization of the distribution of household income. This chapter examines the combination of these trends to describe the new structure of European stratification, and it analyzes what role European integration has played in these changes. Using fixed-effects models that simulate control for unmeasured but stable between-country differences in the drivers of income inequality over the 1973–2013 period, it extrapolates predictions from those models and compares these to data on income inequality from Waves V and VI of the Luxembourg Income Study (LIS), circa 2000–2010, and Eurostat, circa 2008–2012. It then uses individual-level data from the LIS and Eurostat to calculate the level of total income inequality in Europe and the changing contribution of between- and within-nation income inequality to the total.

This is the fifth of six chapters that focus on one country in depth: the UK in this case. GDP fell by over 7% during the Great Recession (GR), a post-war record. Employment fell by less than GDP, and the largest falls were experienced by young people, men, and the less-educated. Average incomes surprisingly grew to end-2009, but seem likely to have fallen substantially afterwards. Income changes during the GR were relatively progressive. The chapter concludes by discussing the effects on households of the fiscal consolidation that started in 2010, comprising tax rises and cuts to welfare spending and public services totalling 6% of national income. Poorer households and families with children will be most affected by tax and benefit reforms, whilst pensioners are relatively protected. More uncertain are the distributional impacts of public service cuts and trends in the macroeconomy.

The chapter examines the results of EU-level actions regarding inequalities and their coordination with member countries. A comprehensive picture is drawn of income inequality and poverty for both the average EU country and the European Union as a single entity. Their linkages to the (combined) labour earnings received by households are explored. Contents and instruments of Europe 2020 flagship anti-poverty policymaking are analysed. Lessons are drawn for future EU policies concerning inequality, in particular for the recent European Pillar of Social Rights. As to policy contents, a strong focus on reducing the poverty gap is promoted, supported by introducing a child basic income and an earned income tax credit aimed at offering adequate minimum-income protection. The EU-level itself is addressed and inequality effects of unification scrutinized. Organizationally, a full and equivalent embedding in the dominant mechanism of EU social and economic policy making is advocated.