Two sides to every story: measuring polarization and inequality in the distribution of work

Individual- and household-based aggregate measures of joblessness can offer conflicting signals about labour market performance if work is unequally distributed. The paper introduces an index that can be used to measure both the extent and the sources of divergence between non-employment rates calculated at the two levels of aggregation. Built around a comparison of the actual household joblessness rate with that which would occur if work were equally distributed, the index conforms to basic axioms of consistency and can be decomposed and applied to any binary variable of interest measured at two different levels of aggregation. Applying these measures to data for Britain, we show that rising inequality in the distribution of work is mostly within group, largely unrelated to changes in size of household or the principal characteristics that are associated with individual joblessness. Copyright (c) 2008 Royal Statistical Society.