Poverty in the USA: The Role of Job Market Polarization and Job Quality

Abstract

The article argues that the puzzles of stagnating poverty rates amidst high growth and declining unemployment in the US can be explained by bad quality jobs and polarization of the jobs market (JMP). JMP accounts for the distribution of jobs across households, where high JMP implies there are more households with multiple employed people and more households with no employed people. Bad jobs are those that do not offer full-time work. While good jobs help households escape poverty, bad jobs do not. Also, lower JMP reduces poverty, but higher JMP pulls down families under the poverty line. The paper suggests that eradicating poverty requires labor market policies to be tailored more towards the distribution of jobs from individuals to households and altering bad jobs into good jobs than merely creating more jobs. This paper contributes to theory connecting jobs quality, polarization, and poverty, with supporting empirical evidence.