The Living Standards of the Low Income Self-Employed

Poverty and inequality measurement in Australia has typically excluded the self-employed because of concerns about a weak relationship between their measured incomes and their standard of living. At the same time, however, families containing self-employed individuals receive substantial income support. Is this support well targeted? This paper compares the living standards of low income self-employed and employee families using data from the ABS 1993–94 Household Expenditure Survey. The use of expenditure data for the measurement of living standards poses particular methodological problems, for which some new solutions are proposed. The paper concludes that the average living standards of low income self-employed families and of self-employed families receiving additional family payments are higher than those of comparable employee families. On the other hand, a greater proportion of self-employed families have low consumption levels.