The Nexus between Poverty and Employment Dependency: An Empirical Analysis

20th International Conference of MEEA, İstanbul, Türkiye, 13 - 14 Eylül 2024, ss.19-20

Poverty, one of the most important socioeconomic challenges throughout the world, can be

reduced if its main roots are revealed. Employment-related factors and household dependency

may considerably explain poverty. In this study, we merge the concepts of employment and

dependency, and generate a variable called employment dependency. We define employment

dependency as the ratio of total population to the employed population and observe a notable

variation between countries. This variable demonstrates how many people an employed person

maintains on average. Then, we define poverty as the ratio of population who have difficulty in

making ends and investigate the connection between poverty rates and employment dependency

ratios in 27 OECD countries for the 2004-2021 period. By applying fixed effects and fractional

probit models, we find that an increase in employment dependency rate significantly

exacerbates poverty rates. This finding remains unchanged even after controlling for average

wage levels, social expenditures, and median wealth levels in the countries. Consequently,

policies towards reducing employment dependency would help alleviate the poverty rates.