This project considers the impact of changes in the structure of employment and pay on income inequality and poverty. It combines employment projections with a tax and benefit model to simulate the distribution of household income, poverty and inequality.

Key points

• The projections in Working Futures 2010–2020 indicate that many long-term employment trends will continue, including shifts towards a knowledge- and service-based economy and increases in high-paid and low-paid jobs at the expense of those in the middle.
• These changes in employment structure will contribute to an increase in poverty rates by 2020, although it is the growing gap between benefits and wages that is the main driver of increasing relative poverty rates.
• Given the changes projected, and current tax and benefit policy, both the relative poverty rate (individuals in households with less than 60 per cent of median household income) and the absolute poverty rate (individuals with less than 60 per cent of 2010/11 median household income) will increase.

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