Week 20 Flashcards
What is poverty?
Poverty classifies an individual/household of being extremely poor if they are perceived to have insufficient funds to meet their basic life sustaining needs and wants.
What is absolute poverty?
The term used to define any individual/household that earns an income below what is required to meet their basic human needs.
What is relative poverty?
The term used to define any individual/household that earns an income below a specific proportion of a country’s median income.
What are the causes of poverty?
- Ageing population
- Unemployment and the benefits system
- Low and depressed wages
Policy solutions to poverty?
- Progressive tax system
What is fiscal drag?
Fiscal drag is when the failure of the government to raise tax thresholds to keep up with inflation results in people on lower incomes paying more tax over time.
What is the poverty trap?
People on a low wage get trapped in relative poverty due to the overlap between the point at which tax gets paid on income and benefits are received.
What is the unemployment trap?
Those unemployed choose to remain out of work due to the generosity of the benefits system.
