Poverty - Unit 3 (AQA)

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Economics ­ Poverty (29.11.12)
Definition:
In the last 3 decades the number of households with incomes below 40% of the average
level has grown to 10 million
It is estimated that currently a third of children live in poverty ­ around half of these live
in households where no adult is in paid employment
Inequality can be discusses as either absolute poverty or relative poverty:
Absolute Poverty:
Occurs when peoples incomes are too low for them to afford basic necessities such as
food, shelter, warmth & clothing
The largest problems of this type of poverty exist in less developed countries
Even in developed countries such as the UK, there are some people who are
undernourished or homeless
Relative Poverty:
Exists when people are poor in comparison to others in society
By this definition, there will always be relative poverty in society
The relatively poor may be unable to afford a certain standard of living at a particular
time ­ As a result they will experience some form of social exclusion
Relative poverty differs between countries & over time (someone judges to be poor in
the UK may be judged as rich in Somalia)
A rise in a countries income will result in a fall in absolute poverty
Relative poverty may rise if those on high incomes benefit more than those on low
incomes from the rise in the countries income
Measuring Poverty:
There is no `official' measure of poverty; the Joseph Rowntree Foundation, a charity set up for
social research has defined a household as being in poverty if its disposable income is less
than 60% of the UK median

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Targets set to achieve eradication of poverty
These were set by the New Labour government from 1997 ­ they established a target of
eradicating poverty within a generation
They regularly carry out & publish poverty audits which compare the government's
performance against a set of targets:
Increase in proportion of working-age people with qualification
Improving literacy & numeracy at age 11
Reducing proportion of older people unable to afford to heat their homes properly
Reducing the number of households with low incomes
Reducing homelessness
Reducing…read more

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Government Policy Measures
Policies used by Governments to address poverty will depend upon whether the intention is to
tackle absolute or relative poverty
Absolute Poverty ­ Addressed by introducing measures to raise the income of the very poorest
groups in society
Relative Poverty ­ Using measures to reduce the gap between the rich and the poor
Measures to tackle poverty:
A national minimum wage:
Increase the wages paid to low-income earners
Over 21 = £6.19
Over 18 = £4.…read more

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The idea of a `trickle down' remains a controversial one ­ it is unlikely that all groups
experiencing poverty would benefit
Increasing Benefits:
Free ­ market economists believe that it will lead to an increase in voluntary
unemployment
Keynesians think increased government spending in this way can stimulate AD, creating
jobs
Despite this, the very poorest members of society dependant solely on sickness or
disability benefits or the state pension may be unable to raise their standard of living in
any other way
Tax Credits:…read more

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National Minimum Wage Legislation:
Imposing a legal national minimum wage helps to address the problems associated with low
pay.…read more

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