4.2.1 Absolute + Relative Poverty Flashcards
What is absolute poverty?
Lack of basic needs to sustain life e.g. food, shelter
How is absolute poverty measured?
- World bank measures it through a poverty line
- poverty line = less than $2.15 a day
Weaknesses of measuring absolute poverty using the poverty line?
- extreme poverty is multidimensional
- it is much more than living on a low income as poverty line suggests
What is the poverty headcount ratio?
- % of pop. living below the national poverty line
- national estimates are based on population weighted subgroups from household survey
What is relative poverty?
- this affects those who are poor relative to others
- e.g. they have income or life chances below the national average
What is a measure of relative poverty?
- in the UK it is below 60% of the median (household) income
- however poverty is multidimensional
Impact of external factors on extreme/absolute poverty
- led to halt in progress in reduction of absolute poverty
- Covid = led to unemployment, lack of travel = downward multiplier
- Russian war led to cost of living crisis = food, energy, housing
- climate change = extreme weather destroys crops, reduces supply = increases prices
- developing countries feel the effects of climate change but are generally not responsible for it
Where is absolute poverty more common?
- in rural areas of developing countries
- 132m of the global poor live in areas of flood risk = impact of climate change impacts on poor disproportionately
- absolute poverty is concentrated within sub-Saharan African = Nigeria, DRC, Tanzania, Ethiopia, Madagascar
Causes of absolute poverty?
- lack of shelter, low urbanisation
- limited access to clean water resources (poor infrastructure)
- food insecurity
- lack of education = illiteracy
- high population growth
- lack of access to healthcare
- high levels of unemployment
- primary produce dependency
Causes of changes in absolute poverty + relative poverty
- changes in unemployment/employment
- economic development, literacy, health + housing
- FDI
- policies which increased trade
- govt tax + benefit policies
- external factors - covid, climate change, Ukraine war
- LE, malnutrition, disease
What is the multidimensional poverty index?
uses 10 key indices:
- 2 health (nutrition, child mortality)
- 2 education (years of schooling + school attendance)
- 6 standard of living (access to clean water, electricity, sanitation, housing, assets, cooking)
How can multidimensional poverty be reduced?
- government spending on sanitation, housing, electricity, access to clean water, healthcare, education
- HOWEVER = highly dependent on tax revenue as a percentage of GDP = more revenue means the govt has more money to spend
Causes of poverty in the UK
- unemployment
- changing patterns of demand for labour
- lack of skills/education
- single parenthood
- longer LE
- sickness + disability
- increased cost of living
- external factors
How does unemployment cause poverty?
- those living on benefits are likely to experience relative poverty
- households where nobody is in paid work + unemployment is long term will suffer from poverty the most
- there has been a rise of work poverty in the UK
How does the changing patterns of demand for labour cause poverty?
- decline of manufacturing + primary industries has led to structural unemployment
- this exists where there is a mismatch between skills of the unemployed + vacancies available
- the unemployed need to retrain in order to be candidates for jobs in other sectors e.g. tertiary + those who did find work in other sectors probably did so at low wages
How does lack of skills/education cause poverty?
- workers with few qualifications are likely to be in low paid jobs
- this is because their marginal product revenue is likely to be low
How does single parenthood cause poverty?
- proportion of single parents in the UK is increasing + there is a high degree of relative poverty among them
- in such households there is only one wage earners whose employment opportunities may be constrained by child care costs
How does LE cause poverty?
- inadequate pension funds can’t provide sufficient funds for living longer now than before
- state pensions are reasonably low
What are the consequences of poverty?
- viscous cycle
- children from poor households more likely to attend poor performing schools + less likely to achieve many qualifications —> more pressured to leave education at 16 to work instead of continuing to higher education
- therefore more likely to be stuck in low paid work + have unstable working hours = lower standards of living + low LE due to inferior housing, poor diets etc.
- when incomes are low people are more likely to take out loans e.g. pay day loans which result in higher interest rates = rising level of indebtedness
Consequences of poverty for the economy
- restricted economic capacity due to low productivity of the poor —> poverty restricts educational opportunities + qualifications so productivity is limited
- increase in financial burden on tax payers due to increased spending on benefits for those unemployed + needing housing benefits
- increased crime rates
- increased indebtedness can cause uncertainty + fall in confidence e.g. banking crisis
