4.2.1 Absolute and relative poverty

ABSOLUTE POVERTY- DEFINITION

• unable to afford sufficient necessities to maintain basic standard of living

MEASURES OF ABSOLUTE POVERTY

• world bank uses a measurement based on % of population living less than $1.90 per day

RELATIVE POVERTY- DEFINITION

• level of household income that is considerably lower than the median level of income within a country

MEASURES OF RELATIVE POVERTY

• in the UK, those with below 60% of median income are considered to be in relative poverty

POVERTY LINE

• min level of income deemed necessary to achieve an adequate standard of living in a given country

POVERTY TRAP

• happens when low-paid workers have little incentive to increase earnings because of high taxes and lost benefits

CAUSES OF CHANGES IN ABSOLUTE OR RELATIVE POVERTY

• inequality in wages or unemployment

• government policy

• health issues- more common in LIC where there is already lack of job opportunities

• wars/ natural disasters- can destroy machinery, jobs, homes

• trade unions

• economic growth

INEQUALITY IN WAGES OR UNEMPLOYMENT

• deindustrialisation has meant some jobs have been lost → cause structural unemployment → makes it harder to find a job as skills may deteriorate → long-term unemployment

• highest paid workers have seen their wages increase significantly more than those on lower wages → increase relative poverty

GOVERNMENT POLICY

• taxes have become more regressive

• state benefits have fallen in relative value

• public sector workers have had low wage increases→ increases relative poverty

TRADE UNIONS

• unions tend to represent lower paid workers

• decline in their power has meant that these workers have been unable to bargain for higher wages → rise in relative poverty

ECONOMIC GROWTH

• growth and development in developing countries → increase gov spending → fall in absolute poverty