Relative poverty in the UK has risen massively since 1979 mainly because of increasing worklessness, rising earnings dispersion and benefits indexed to prices, not wages. The economic force underlying this is the significant shift in demand against the unskilled. This has substantially weakened the low‐skill labour market which has increased both pay dispersion and worklessness, particularly among low‐skilled men. Practical policies discussed include improving education and overall well‐being for children in the lower part of the ability range, raising wage floors, New Deal policies, tax credits and benefits for the workless.
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