Implications of hours worked for poverty and inequality

11th November 2020

This article published by Fraser of Allender Institute today (11th November 2020) is the first in a series over the next few days.

Hours worked play a significant role in determining earnings inequality among those in-work, and can influence the likelihood that working households find themselves in poverty. The security and regularity of hours also influence financial security and wellbeing.

Earlier in 2020, we embarked on a new project that looks at how hours of work influence inequality and poverty. The aims of the project are to examine trends in hours worked, the factors determining those trends, and how those trends are influencing poverty and inequality, and to use these findings to make recommendations for policy.

The work is made possible by the support of the Standard Life Foundation, and is being delivered by the Fraser of Allander Institute and the Scottish Centre for Employment Research.

Today we publish findings the project's interim report. The interim report summarises the initial results of analysis of major UK wide surveys of the labour market and household incomes. The remainder of the project will involve further data analysis alongside qualitative research with employers and employees, and an analysis of trends in hours worked and policy responses in other countries.

Over the next few days we will summarise key points from the interim report in a series of short articles. Today's blog looks at recent trends in hours worked by individuals and households, and the role these trends play in influencing inequality and poverty.

Hours worked account for a small but increasingly important part of male earnings inequality

Inequality in weekly earnings can be accounted for through three channels: variance in hourly pay; variance in hours worked; and the correlation between hourly pay and hours worked (in other words, do high paid jobs tend to go hand-in-hand with relatively long hours, accentuating earnings inequality, or shorter hours, reducing inequality?)

For men, inequality in hourly pay accounts for the lion's share of overall earnings inequality (the contribution of variance in hourly pay to the variance of weekly earnings is shown in light grey in Chart 1). Variance in hours worked (shown in dark grey) accounts for a relatively smaller share (most men continue to work something akin to a 40-hour week).

Read the full article HERE