The research report, ‘Double Trouble’, investigates the relationship between economic inequality and poverty in the UK and examines the trends in relative income poverty rates and income inequality over the period 1961 to 2015/16 (the latest year income data are currently available). Oxfam GB commissioned this research because the relationship between UK poverty and inequality is complex and not well understood; not least because historically these phenomena have tended to be researched separately.
The economic inequality in the UK is high relative to many comparable advanced economies and that inequality and relative income poverty increased most dramatically over the 1980s.
The objective of this research is to review evidence of the relationship between economic inequality and poverty in the UK and to provide a clear understanding of whether it is important to reduce inequality even when the ultimate objective is to tackle poverty. To do this, the authors examine different measures of inequality to explore why different inequality measures may be more or less correlated with measures of poverty in a purely mechanical (mathematical) sense.
This research makes an important contribution to the understanding of the relationship between economic inequality and poverty but simply scratches the surface of this vast topic. There remains more work to be done on the empirical estimation of the relationship – the authors only had the time and resources to focus the empirical estimation on relative income poverty and income inequality, and there remains important work to be done on the role of gender, the labour market and understanding the role of other mechanisms.