Abstract

Highlights

• We argue that low wages can create and perpetuate destitution among the working poor.
• Our index of destitution offers insights into the causes and consequences of destitution.
• We discuss the factors that can help the working poor to avoid the traps of destitution.

Abstract

In economics destitution is traditionally interpreted as a product of labour market exclusion. Our work departs from the dominant models of poverty by considering destitution among a specific category of workers known as the working poor. Low wages and job insecurity in the informal sector in developing economies can create and perpetuate destitution among the working poor. Our precise contributions are three-fold: first, in order to understand causes and consequences of destitution, we develop an index of destitution from social exclusion of the working poor. Secondly, we test the predictions of this index by using micro-data collected from a sample survey in Bangladesh. Thirdly, from the micro-data we not only offer insights into the sources of destitution but also explain the factors that prevent the working poor from falling into the traps of destitution.

Keywords

Destitution among working poor; Indicators of destitution; MIMIC model of destitution