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This chapter in ‘Monitoring Social Inclusion in Europe’ explores the missing links between employment policy success and inclusion policy failure. The focus is on individuals in the 20 to 59 age cohort and empirical analyses are relying on the EU Labour Force Survey (EU LFS) and the EU Survey on Income and Living Conditions (EU SILC). It updates and complements our earlier work and publications on household employment. The analysis proceeds in two steps. The first step considers the distribution of individual jobs over households, thus establishing a link between individual employment rates and household employment rates. Following the work by Gregg, Scutella and Wadsworth (2008, 2010) a ‘polarization index’ is created to measure the size of unequal distribution of employment over households. Actual changes in household joblessness are decomposed in (i) changes due to changing individual employment rates and changing household structures and (ii) changes in the distribution of jobs over households. The second step in the analysis matches employment at both levels of aggregation with poverty. Therefore, we decompose changes in the at-risk-of-poverty rates on the basis of (i) changes in the poverty risks of jobless households, and (ii) changes in the poverty risks of other (non-jobless) households; (iii) changes in household joblessness due to changes in individual employment rates and changing household structures and (iv) changes in the distribution of employment. The proposed technique does yield interesting insights into the trajectories that individual EU welfare states have followed over the past ten years. The book is available at the Eurostat website, but it can also been completely downloaded here.

Considering the contribution of the distribution of individual wages and earnings to that of household incomes we find two separate literatures that should be brought together, and bring “new institutions” into play. Growing female employment, rising dual-earnership and part-time employment underline its relevance. We discuss the measurement of wage inequality, data sources, and stylized facts of wage dispersion for rich countries. The literature explaining the dispersion of wage rates and the role of institutions is evaluated, from the early 1980s to the recent literature on job polarization and tasks as well as on the minimum wage. Distinguishing between supply-and-demand approaches and institutional ones, we find supply and demand challenged by the empirical measurement of technological change and a risk of ad hoc additions, without realizing their institutional preconditions. The institutional approach faces an abundance of institutions without a clear conceptual delineation of institutions and their interactions. Empirical cross-country analysis of the correlation between institutional measures and wage inequality incorporates unemployment and working hours dynamics, discussing the problems of matching individuals to their relevant institutional framework. Minimum wage legislation and active labor market policies come out negatively correlated to earnings inequality in US and EU countries.