Poverty Trap

7 Key excerpts on "Poverty Trap"

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  Development and the State in the 21st Century

  Tackling the Challenges facing the Developing World

  • Erica Frantz, Natasha M. Ezrow, Andrea Kendall-Taylor, Natasha M. Lindstaedt (née Ezrow)(Authors)
  • 2015(Publication Date)
  • Bloomsbury Academic

    (Publisher)

  Chapter 1 , it entails improving economic and social well-being of people, by developing human capital, infrastructure, environmental sustainability, social inclusion, health care, security, literacy and employment. According to Sen, economic growth is just ‘one aspect of the process of economic development’ (1983, 748).

  One of the problems with approaches that assume that economic growth will reduce poverty rates is that most of the very poor meet their needs through subsistent methods such as farming, hunting and bartering. Their standard of living may not go up just because the national income has increased. In many countries growth could take place, yet millions of people may still be stuck in ruts of poverty, or Poverty Traps. The next section explains in more detail what Poverty Traps are and why they persist.

  Poverty and development: Poverty Traps

  For many people in the developing world, poverty is a lifelong condition. With few opportunities and options, the impoverished get stuck in a Poverty Trap. The Poverty Trap refers to any self-reinforcing mechanisms that cause the poor to stay poor (Bloom et al., 2003, 355). Poverty Traps reinforce chronic poverty, which affects as many as 580 million people (Hulme, 2003, 411). Chronic poverty is conceptualized as poverty that is transmitted from one generation to the next. Children of impoverished households are more likely to remain in poverty. With chronic poverty ‘an individual experiences significant capability deprivations for a period of five years or more’ (Hulme, 2003, 405). In other words, they are chronically poor if they are living under the poverty line for more than five years. The poverty line is the minimum asset threshold below which families are not able to educate their children, and build up their productive assets (Carter et al., 2007,836). For those living in abject poverty, measured as less than $1.25 a day by the monetary approach, poverty is almost always enduring. The next sections explain why Poverty Traps endure.

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  Principles of Microeconomics 2e

  • Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
  • 2017(Publication Date)
  • Openstax

    (Publisher)

  If Congress voted every few years to redefine poverty, then it would be difficult to compare rates over time. After all, would a lower poverty rate change the definition, or that people were actually better off? Government statisticians at the U.S. Census Bureau have ongoing research programs to address questions like these. 15.2 | The Poverty Trap By the end of this section, you will be able to: • Explain the Poverty Trap, noting how government programs impact it • Identify potential issues in government programs that seek to reduce poverty • Calculate a budget constraint line that represents the Poverty Trap Can you give people too much help, or the wrong kind of help? When people are provided with food, shelter, healthcare, income, and other necessities, assistance may reduce their incentive to work. Consider a program to fight poverty that works in this reasonable-sounding manner: the government provides assistance to the poor, but as the poor earn income to support themselves, the government reduces the level of assistance it provides. With such a program, every time a poor person earns $100, the person loses $100 in government support. As a result, the person experiences no net gain for working. Economists call this problem the Poverty Trap. Consider the situation a single-parent family faces. Figure 15.3 illustrates a single mother (earning $8 an hour) with two children. First, consider the labor-leisure budget constraint that this family faces in a situation without government assistance. On the horizontal axis is hours of leisure (or time spent with family responsibilities) increasing in quantity from right to left. Also on the horizontal axis is the number of hours at paid work, going from zero hours on the right to the maximum of 2,500 hours on the left. On the vertical axis is the amount of income per year rising from low to higher amounts of income.

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  Principles of Economics 3e

  • Steven A. Greenlaw, David Shapiro, Daniel MacDonald(Authors)
  • 2022(Publication Date)
  • Openstax

    (Publisher)

  If Congress voted every few years to redefine poverty, then it would be difficult to compare rates over time. After all, would a lower poverty rate change the definition, or is it the case that people were actually better off? Government statisticians at the U.S. Census Bureau have ongoing research programs to address questions like these. CLEAR IT UP 362 15 • Poverty and Economic Inequality Access for free at openstax.org 15.2 The Poverty Trap LEARNING OBJECTIVES By the end of this section, you will be able to: • Explain the Poverty Trap, noting how government programs impact it • Identify potential issues in government programs that seek to reduce poverty • Calculate a budget constraint line that represents the Poverty Trap Can you give people too much help, or the wrong kind of help? When people are provided with food, shelter, healthcare, income, and other necessities, assistance may reduce their incentive to work, particularly if their work is likely to offer low wages and reduce government assistance. Consider a program to fight poverty that works in this reasonable-sounding manner: the government provides assistance to the those who need it, but as the recipients earn income to support themselves, the government reduces the level of assistance it provides. With such a program, every time a person earns $100, they lose $100 in government support. As a result, the person experiences no net gain for working. Economists call this problem the Poverty Trap. Consider the situation a single-parent family faces. Figure 15.3 illustrates a single mother (earning $8 an hour) with two children. First, consider the labor-leisure budget constraint that this family faces in a situation without government assistance. On the horizontal axis is hours of leisure (or time spent with family responsibilities) increasing in quantity from left to right.

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  The Political Economy of Poverty, Vulner

  Building Bridges of Resilience, Entrepreneurshi

  • Munyaradzi Mawere(Author)
  • 2017(Publication Date)
  • Langaa RPCIG

    (Publisher)

  However, because individual lives are dynamic, people do not remain in those holes forever. One year they are in a low-income hole, but the next year they have found a job or gotten a promotion and become rich or not poor anymore. The poverty holes that they were in the previous year do not go away. Others inevitably find themselves in those same holes because they are caused by a persistent defect in the economic structure of the society. Therefore, the structural school of poverty believe that 71 impoverished people are not the same people every year. Besides, the school believes that the only way to reduce poverty is to alter the economic structure so as to reduce the number of low-income holes in the society. Cycles of poverty in Africa Poverty moves and trans-generate and regenerate in a cycle. The cycles have their catalyst that activates the poverty reaction and lifespan in a country, group or individual. In Africa, there are many reasons that make some countries in the continent to be poor while others are somewhat rich. Many of such factors are more of domestic policies – institutional – which the foreign policies externalities capitalises upon so as to override the domestic economies and cyclically inflict poverty. There may be many of such possible cycles but there are three most prominent cycles which inflict and regenerates poverty if the catalysts are activated in any country’s economy. The three cycles of poverty have their components, manifestations and regeneration strategies in Africa. The cycle of poverty include the Social Cycle of Poverty (SCP), Political Cycle of Poverty (PCP) and the Economic Cycle of Poverty (ECP). The strategies to break the cycle of poverty in Africa and other developing countries are as well analysed and articulated. The Social Cycle of Poverty (SCP) operates in a culture milieu of life patterned around neglect of basic work ethics and regular duties so as to boost personal and national income generated.

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  Sustainable Growth in a Post-Scarcity World

  Consumption, Demand, and the Poverty Penalty

  • Philip Sadler(Author)
  • 2016(Publication Date)
  • Routledge

    (Publisher)

  In Collier’s opinion, the problems these countries have are very different from those addressed for the past four decades in developing countries generally. Aid in its traditional form does not work well in these environments. Change in the societies at the very bottom must come from within. In all these countries, there are struggles between those trying to achieve change and entrenched interests opposing it. Much can be done to strengthen the hand of the reformers. But to do so will involve drawing upon a wide range of approaches.

  Collier lists a number of factors which, taken together, lead to persistent extreme poverty.

  The Conflict Trap

  Some of the bottom billion countries are stuck in a pattern of violence, either a prolonged, civil war or a series of coups d’état. Countries with a high level of dependence on exports of valuable resources such as oil or diamonds are particularly likely to be conflict-ridden. Natural resources help both to finance conflict and to motivate it.

  The Natural Resource Trap

  It might be assumed that the discovery of natural resource wealth would be a catalyst for prosperity, but this is only exceptionally the case. The ‘resource curse’ causes countries to suffer from the ‘Dutch disease’ (so-called because of the effects of North Sea gas on the Dutch economy), whereby resource exports cause the country’s currency to rise in value against other currencies, thus making the country’s other export activities uncompetitive.

  The Landlocked Trap

  Landlocked countries incur much higher costs to import or export goods. Costs vary in ways that don’t depend on distance. The transport costs for a landlocked country depend on how much its coastal neighbour has spent on transport infrastructure. Landlocked countries also depend on their neighbours for markets; if neighbours are economically stagnant or embroiled in civil war that will obviously affect trade.

  The Trap of Poor Governance

  Poor governance and policies can destroy an economy with alarming speed (Zimbabwe provides an obvious example). The leaders of some of the poorest countries are among some of the global superrich. Many of the politicians and senior public officials in the bottom billion are corrupt.

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  Understanding and Reducing Persistent Poverty in Africa

  • Christopher B. Barrett, Peter Little, Michael Carter(Authors)
  • 2013(Publication Date)
  • Taylor & Francis

    (Publisher)

  The Economics of Poverty Traps and Persistent Poverty: An Asset-Based Approach MICHAEL R. CARTER & CHRISTOPHER B. BARRETT *University of Wisconsin, Madison, USA, **Cornell University, Ithaca, NY, USA  

  ABSTRACT   

  Longitudinal data on household living standards open the way to a deeper analysis of the nature and extent of poverty. While a number of studies have exploited this type of data to distinguish transitory from more chronic forms of income or expenditure poverty, this paper develops an asset-based approach to poverty analysis that makes it possible to distinguish deep-rooted, persistent structural poverty from poverty that passes naturally with time due to systemic growth processes. Drawing on the economic theory of Poverty Traps and bifurcated accumulation strategies, this paper briefly discusses some feasible estimation strategies for empirically identifying Poverty Traps and long-term, persistent structural poverty, as well as relevant extensions of the popular Foster-Greer-Thorbecke class of poverty measures. The paper closes with reflections on how asset-based poverty can be used to underwrite the design of persistent poverty reduction strategies.

   

  I. Persistent Poverty and the Challenge of Forward-looking Poverty Measurement

  Much empirical poverty analysis of poverty is dedicated to defining, measuring or locating who is recently poor. Such analysis is almost unavoidably backward looking in the sense that it creates a portrait of who was poor at the time survey data were collected. However, the observation of persistent or chronic poverty motivates a more forward-looking question: Who will likely remain poor into the future?1

  The empirical papers that comprise this special issue contribute to answering this question by trying to understand the structural reasons that underlie poverty's persistence, asking when and why poverty reproduces itself over time, ‘laying eggs’ as one of the informants to the Chronic Poverty Report describes it (CPRC, 2004: 3). Some of the papers try to understand who among the poor is structurally positioned to take advantage of new economic opportunities when they appear (Adato et al., Barrett et al., Krishna et al., Peters and Whitehead).2

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  Social Perspectives on Poverty: Diagnosing the causes and effects of deprivation

  • Rodolfo B. Valdenarro(Author)
  • 2020(Publication Date)
  • Society Publishing

    (Publisher)

  This chapter provides highlights on the causes of the poverty such as lack of income and assets, the basics of poverty like voicelessness and powerlessness, and vulnerability. This chapter also mentions the cultural cause of the poverty and the lie of worthlessness that is being caused by the poverty. This chapter addresses how to find out the solutions or how to untangle the causes of poverty. This chapter is consisting of the effects that are produced by the poverty such as feminist perspective on poverty, minimum calories consumptions, minimum consumption expenditure, the approach of government with respect to the curb poverty, and vicious circle of poverty. 3.1. INTRODUCTION Poverty refers to a state in which one lacks a usual or socially acceptable amount of money or material possessions. In phase of poverty, people lack the key resources which is essential in satisfying one’s needs and wants. In this context, the identification of poor people first requires a determination of the various key factors and elements that constitutes basic needs. These may be defined as narrowly as “those which is essential for survival” or as broadly as “those reflecting the prevailing standard of living in the community.” The first criteria take into consideration those people who are near the borderline of starvation or death from exposure; the second would extend to people whose basic amenities such as nutrition, clothing, and housing, though adequate to preserve life, do not measure up to those of the population as a whole. The problem of definition is further complicated by the noneconomic connotations that the word poverty has acquired. Poverty has been associated, for example, with poor health conditions, poor quality of education or skills, an unwillingness or inability to work, high rates of disorderly or disruptive behavior, and improvidence.

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