The Rise of Unemployment and Working Poverty: An Evolutionary Macroeconomic Perspective

  • John Foster


Over the past twenty years, we have witnessed a steady increase in the underlying rate of unemployment in OECD countries. At the same time, there has been a parallel increase in the numbers of working poor. Gottschalk (1997) has reported that, in the United States, those in the lower half of the earnings distribution were significantly worse off in an absolute sense in 1994, compared to 1973. Over the same period, the poverty rate rose by 31 per cent even though US mean real per capita income increased by 27 per cent. In other words, the poverty-reducing effect of economic growth was more than offset by increasing inequality. Only those in the top 20 per cent of the earnings distribution were better off in 1994 compared to 1973. Similar tendencies exist in other OECD countries, although the unemployment/working poverty mix varies, depending on the particular institutional and regulatory arrangements in different countries.


Creative Destruction Stabilization Policy Earning Distribution Circular Flow Macroeconomic Analysis 
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© Palgrave Macmillan, a division of Macmillan Publishers Limited 1999

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  • John Foster

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