Why rising tides don’t lift all boats: An explanation ofthe relationship between poverty and unemploymentin Britain

This paper is motivated by the lack of any obvious relationship betweenaggregate poverty and unemployment in Great Britain. We derive aframework based on individuals’ risks of unemployment and poverty,and how these vary over the economic cycle. Analysing the BritishHousehold Panel Survey for 1991-96, we are able to square the microevidence — that unemployment matters for poverty – with the macropicture — that there’s no strong link. We then go on to identify whichhousehold and individual characteristics are associated with whether anindividual’s poverty risk is vulnerable to the economic cycle.[...]